KINGSTON, Jamaica, CMC – Jamaica is proposing to spend a record one trillion dollars (One Jamaica dollar=US$0.008 cents) during this fiscal year, according to the Estimates of Expenditure tabled in the House of Representatives on Tuesday.
Finance and the Public Service Minister, Dr. Nigel Clarke, who will outline details on the allocations in the 2023/24 national budget on March 7, said the funds are allocated across the main expenditure categories and are comprised of non-debt recurrent expenditure of J$665.7 billion, capital expenditure of J$75.3 billion, and debt servicing of J$280.6 billion.
Included in the non-debt recurrent expenditure are allocations to implement the second year of the three-year public-sector compensation restructure and operationalize the Independent Fiscal Commission.
“The allocation for capital expenditure considers the existing capacity to implement capital programs and focuses on the priority areas to enhance development. Debt service at 9.5 percent of gross domestic product (GDP), which reflects amortization [that is] principal repayments and interest payments, reflects action taken over prior years to reduce the debt burden,” Clarke told legislators.
“With interest payments this year of J$155 billion fully financed by revenue, the overall public debt is estimated to end the current fiscal year on March 31, 2023, at 79.7 percent of GDP. He added that this is expected to decline to 74.2 percent of GDP by the fiscal year 2023/24,” he added.
He noted that this is a projection, but should it be achieved, “it would mark the first time since the nationalization of the financial sector crisis through the Financial Sector Adjustment Company (FINSAC) in the latter half of the 1990s that debt has entered the domain of pre-FINSAC levels”.
In addition, Central Government revenue and grant inflows are estimated at J$897.6 billion, which, alongside the above-the-line expenditure of J$887.7 billion, will generate the required fiscal balance surplus of J$9.9 billion or 0.3 percent of GDP, consistent with budgetary rules.
Clarke said the corresponding primary balance required for debt service and to generate the targeted fiscal balance is approximately J$165 billion or 5.6 percent of GDP.
“It should be noted that the revenue estimates tabled today reflect the original budget tabled in March of 2022, although we have indicated revisions to the fiscal year 2022/23 revenue estimates at each tabling of the three supplementary expenditure estimates,” he said.
Clarke told Parliament that the most oversized single item of expenditure is the amount of J$338 billion for wages and salaries, which includes provisions for the second year of implementation of the public-sector compensation restructuring.
He said that the level of expenditure is approximately J$100 billion higher than the wages and salaries for the fiscal year 2021/2022 after adjusting for allowances previously captured in programs.
“It should be abundantly evident that based on what I’ve just described that there is no room, in the upcoming fiscal year, which is 2023/24, for salary payments related to 2022/23 to be made.
“The amount, J$338 billion, only contains 2023/24 salaries… so we are, therefore, working feverishly, making ourselves available to complete negotiations on the public-sector restructuring in the remaining weeks of this fiscal year to facilitate the fiscal year 2022/23 salaries in the fiscal year 2022/23,” Clarke told legislators.
He said that any amounts not paid by March 31 would have to be paid over several years, beginning in the fiscal year that follows the upcoming one.
“Even if the first time is a ‘no,’ we are not deterred; that does not mean we cannot get to a yes. There are only a few weeks left, and we are available morning, noon, and night, weekdays and weekends. Let’s talk. Let’s get it done.
“I want to make it clear, though, that this also impacts those in the political directorate, councilors, parliamentarians, ministers, et cetera. The people have to come before us. We will not be able to make compensation adjustments until we adjust for the major groups. This may not be convenient, but it’s simply a matter of principle,” Clarke said.
Concerning the self-financing public bodies, the fiscal year 2023/24 program budgets an overall revenue of J$581 billion and an overall balance surplus of $29.2 billion or one percent of GDP.
The capital expenditure program for Public Bodies is budgeted at J$75.9 billion or 2.6 percent of GDP, with the National Housing Trust, Clarendon Alumina Production, and National Water Commission accounting for 68 percent of the capital expenditure.
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