JIS News

Minister of Finance and the Public Service, Hon. Audley Shaw, has cited increased interest costs and public sector wages, as the main reasons for the approximately $6.3 billion increase in the First Supplementary Estimates, which were tabled in the House of Representatives yesterday (Sept. 22).
The increase brings the 2009/10 Budget to $561.3 billion, up from $555 billion.
Minister Shaw, who was speaking at the weekly post-Cabinet press briefing at Jamaica House today (Sept. 23), explained that the Government has had “to accommodate an additional $16 billion in interest costs, as well as close to $1 billion additionally, in terms of public sector wages.”
The increase was balanced by cuts of about $6 billion from the Capital side. “The difference between what we have had to cut and what we have increased, the amount is roughly the same $6 billion,” the Minister noted.
According to the new figures, the Capital Budget was reduced by just under $6 billion, however, the Recurrent Budget increased by just over $12 billion, leading to the over $6 billion increase.
In all, $27.1 billion was added to the 2009/10 Estimates by the Government, with $25 billion going to the Recurrent Budget and $2.1 billion to the Capital Budget. However, cuts and transferrals added up to $20.8 billion, resulting in a net increase of only $6.3 billion.
The estimates will be debated next Tuesday (Sept. 29) in the House of Representatives, after the figures are reviewed by the Standing Finance Committee of the House, which comprises all 60 Members of Parliament (MPs).
Turning to other matters, Mr. Shaw pointed to increased challenges faced by the Government, due to the current global economic downturn, which has contributed to a shortfall in anticipated proceeds from divestment and a reduction in revenue.
“The simple reason for that is that the time in which we are operating in is not the best time for divestment. Certain resources, we had looked at, for instance, the divestment of the Jamaica Public Service Company Limited (JPSCo), our 20 per cent shares in that, was part of an ambitious programme of about a $12 billion divestment proceeds that we had anticipated,” the Minister explained.
He noted that due to the global conditions, divesting at this time would result in “virtually…giving away your asset. So it’s a decision that we’ve had to make, so that when you combine the reduction in revenue, which is projected at about $13 billion, and the shortfall in the projected proceeds from divestment, mitigated somewhat by some $2.6 billion in grants that we received from the European Union (EU), we see that we have a challenge there that we will have to deal with.”
He noted that, within this context, it is even more important that Jamaica proceeds to finalise an agreement with the International Monetary Fund (IMF), partly due to the fact that revenue streams, in terms of foreign exchange earnings and foreign exchange revenue, are “off.”
“Between earnings in foreign exchange and earnings of foreign exchange in revenue, we are significantly off: remittances are down, the bauxite income is down. So out of an abundance of caution, we made the decision that we would submit an application for a standby agreement with the IMF, so that we would have access to up to US$1.2 billion, should it become necessary for the country,” Mr. Shaw explained.

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