Gov’t Tables $1.3 Trillion Budget for 2024/25

The Government is proposing to spend a total of $1.3 trillion for fiscal year 2024/25.

Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, made the disclosure as he tabled the Estimates of Expenditure in the House of Representatives on Thursday (February 15).

Dr. Clarke said this is to be funded by revenue and grant receipts of $1 trillion, and loan and other financing totalling $0.3 trillion.

“It should be noted that the Government has debt maturing of $317 billion this year, which is included in the expenditure figure, as compared with $125 billion that matured last year,” he stated.

“When you look at non-debt expenditure, however, at approximately $849.9 billion, this is 10.9 per cent higher than the non-debt expenditure of $765.8 billion in the fourth supplementary estimates of 2023/24,” the Minister added.

Dr. Clarke said that revenue expenditure profile generates the targeted positive fiscal balance of 0.3 per cent of gross domestic product (GDP). This, as required under the recovery profile generated following the suspension of fiscal rules in the 2020/21 financial year.

Contributing to the $1.3 trillion expenditure profile are non-debt recurrent expenditure of $769.9 billion, capital expenditure of $80 billion and debt service of $491.2 billion.

Non-debt recurrent expenditure includes allocations for recurrent programme expenses at $327.8 billion, as well as compensation expenses at $442 billion.

“The compensation allocation includes an estimated amount to conclude the implementation phase of the restructured compensation system during the fiscal year. Wages and salaries are projected to represent 12.6 per cent of GDP in 2024/25, and this is up from 9.2 per cent of GDP in 2019/20,” Dr. Clarke stated.

“It must be noted that the amount budgeted for public-sector compensation for 2024/25 exceeds actual compensation for 2021/22, the year before the compensation restructuring began, by approximately $200 billion. It is obvious that the Government has made a concerted effort to address historical challenges with public-sector compensation, and now it is time to consolidate,” he added.

The Finance Minister noted that the country needs to be careful to ensure that sufficient resources are left for growth-inducing capital expenditure, for programmes that can enhance Jamaica’s human capital and for social expenditure on behalf of more vulnerable members of the society.

Dr. Clarke informed that the capital expenditure of $80 billion includes an allocation to commence implementation of the Shared Prosperity through Accelerated Improvement to our Road Network (SPARK) programme during 2024/25, and an allocation to continue the ongoing capital expenditure (CapEx) programmes that are outlined in the public-sector investment programme.

He noted that improving human capital is a major theme in the allocation of CapEx this year.

Dr. Clarke indicated that the capital expenditure budget includes allocations for the most comprehensive health infrastructure improvement since Jamaica’s Independence.

To this end, approximately $11 billion to $12 billion is being allocated for the Spanish Town Hospital’s modernisation, continued construction of the new Western Children’s and Adolescent Hospital, rehabilitation of the Cornwall Regional Hospital, as well as upgrades to the May Pen and St. Ann’s Bay Hospitals and the Greater Portmore and St. Jago Park health centres, among other CapEx expenditures in the Ministry of Health and Wellness.

Regarding debt services, this includes $173.8 billion for interest payments and $317 billion for the repayment of debts that are maturing.

“The repayment of debts that are maturing, otherwise known as amortisation payments, represents an increase of 128.9 per cent over fiscal year 2023/24, primarily due to the large maturities on both domestic and external portfolios; and those would have been programmed at the time those debts were entered into several years ago and, in some cases, more than a decade ago,” Dr. Clarke stated.

“This House will recall that a large chunk of the maturing debt was pre-financed at low interest rate through Jamaica’s entry into the resilience and sustainability financing [arrangement] with the International Monetary Fund, planning in advance,” he added.

Dr. Clarke informed that loan financing is, therefore, programmed at $191 billion, and combined with the significant amortisation amount, will contribute to a net reduction in the debt as the Government continues to work towards achieving the legislative debt-to-GDP target of 60 per cent or less.

He further noted that the revenue estimates tabled reflect the 2023/24 original budget position, “although we have indicated revisions to the estimated revenue alongside tabling of the supplementary estimates during the year, due to the revised estimates not being prepared at the detail level required for the annual Budget”.

“So, the revenue estimates that are tabled today are the original revenue estimates in March of last year. They would have been revised upwards in subsequent supplementaries,” Dr. Clarke pointed out.

Regarding self-financing public bodies, these are programmed to achieve an overall balance surplus of $34.4 billion in the upcoming fiscal year, and this is to be generated from the operations of 53 entities.

The self-financing public bodies are programmed to undertake $96.4 billion in capital expenditure during the year, mainly through the National Housing Trust at $50.7 billion, National Water Commission – $10.8 billion, Port Authority – $7.9 billion, Airports Authority of Jamaica – $4.7 billion, Petrojam – $3.6 billion, and Housing Agency of Jamaica – $3.2 billion.

“The House is asked to note that between the central government and the self-financing public bodies, capital expenditure for fiscal year 2024/25 is programmed at $176.4 billion or 5.4 per cent of GDP,” Dr. Clarke indicated.

“This represents a 1.6 percentage points increase in capital expenditure as a percentage of GDP over the estimated 2023/24 out-turn and demonstrates the Government’s effort towards improving the economic growth of the country and facilitating the associative positive secondary effects of development advances on the country,” he added.

Meanwhile, debt to GDP is on track for 72.2 per cent by March 31, 2023, lower than the 74 per cent previously targeted, and is projected to be 67.2 per cent by March 31, of 2025.

Dr. Clarke noted that if achieved, this will be the lowest debt ratio in well over 40 years.

“This year, the debt ratio is in the region of the pre-FINSAC levels, and if we are to achieve the programme execution this year as outlined, it will be the lowest in over 40 years,” he stated.

Details on allocations under the 2024/25 fiscal year expenditure will be provided during the Minister’s Budget presentation on March 12, 2024.

The Standing Finance Committee is scheduled to meet from March 5 to 7 at Gordon House to review the Estimates.