Jamaica’s Finance Minister Dr. Nigel Clarke tabled the island’s first trillion-dollar budget during the sitting of the House of Representatives on Tuesday.
The estimates of expenditure for financial year 2023/2024 is one trillion, 21 billion, six hundred and seventy-two million, six hundred and forty-five thousand dollars ($1021, 672,645,000)
This is Jamaica’s first trillion-dollar budget and is $23 billion or 2.3 percent more than the $998 billion budget for financial year 2022/2023.
Clarke said the funds are allocated across the main expenditure categories and comprise non-debt recurrent expenditure of $665.7 billion, capital expenditure of $75.3 billion, and debt servicing of $280.6 billion.
Clarke informed that the largest single item of expenditure is $338 billion for wages and salaries, which includes provisions for the second year of implementation of the public-sector compensation restructuring.
He pointed out that the level of expenditure is approximately $100 billion higher than the wages and salaries for 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,” Dr. Clarke said.
“The amount, $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 fiscal year 2022/23 salaries in fiscal year 2022/23,” he told the House.
The minister noted that any of the amounts not paid by March 31, will have to be paid over a number of 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 that 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,” Dr. Clarke urged.
“I want to make it clear, though, that this also has an impact on those in the political directorate, councilors, parliamentarians, ministers, et cetera. The people have to come before us. We will not be in a position to make compensation adjustments until we adjust for the major groups. This may not be convenient, but it’s simply a matter of principle,” he added.
Several public sector unions including teachers are yet to sign on to the new compensation package.
Included in the non-debt recurrent expenditure are allocations to implement the second year of the three-year public-sector compensation restructure and allocations to operationalize the Independent Fiscal Commission, which has been captured as Head 10,000 in the expenditure estimates.
“The allocation for capital expenditure takes into account 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,” Dr. Clarke said.
“With interest payments this year of $155 billion being 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. This is expected to decline further to 74.2 percent of GDP by fiscal year 2023/24,” he added.
The minister 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 $897.6 billion, which, alongside the above-the-line expenditure of $887.7 billion, will generate the required fiscal balance surplus of $9.9 billion or 0.3 percent of GDP, consistent with fiscal rules.
Dr. Nigel Clarke said the corresponding primary balance required for debt service and to generate the targeted fiscal balance is approximately $165 billion or 5.6 per cent 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 fiscal year 2022/23 revenue estimates at each tabling of the three supplementary expenditure estimates,” he noted.
With respect to the self-financing public bodies, the fiscal year 2023/24 program budgets overall revenue of $581 billion and an overall balance surplus of $29.2 billion or one per cent of GDP.
The capital expenditure program for Public Bodies is budgeted at $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.
Details on the allocations in the 2023/24 Budget will be provided during Nigel Clarke’s Budget presentation on March 7, 2023.
(JIS)
