Business

Jamaica now has a budget surplus — Shaw

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Wednesday, August 30, 2017

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Minister of Finance and the Public Service Audley Shaw says that Jamaica is finally experiencing a budget surplus, after many years of budget deficits.

Speaking at a press briefing at his ministry on Friday, Shaw noted that the primary budget surplus for the last fiscal year had increased to $135.9 billion, which was $7.7 billion or six per cent above the targeted surplus.

“This strong budget performance has provided the Government with more funds for investing in the Jamaican people and future generations,” he noted.

Shaw's presentation at the briefing focused on the fact the Government's most recent debt-management exercise has enabled it to prepay some US$526 million in debt that was issued under the Jamaica Debt Exchange.

In return for raising those funds to meet the prepayment, Shaw explained that the Government was able to issue longer-term debts of US$869 million that will now mature in 2028 and 2045, instead of 2019 to 2025. He said that the outcome of his efforts was a strong indication from the international capital market that it recognises Jamaica's continuing sound economic reform results.

Shaw said that in light of this result, the debt trajectory is expected to fall below 109 per cent of gross domestic product (GDP) by the end of 2017/18. The debt-to-GDP ratio was already down to 115 per cent of GDP, coming from 150 per cent of GDP, and will remain on track.

He said that the success must be seen against the background of other similar performances by the Government in fulfilling its pre-election promises to the electorate.

REMEMBER THE $1.5 MILLION

Among these, he highlighted the Government fulfilling its promise to taxpayers to lift the income tax threshold to $1.5 million.

“It has now become something that may be receding in the minds of some people. They said we could not do it and we have done it,” Shaw said.

He said that the $1.5-million threshold has added to take-home pay for about 200,000 Jamaican taxpayers some $26 billion a year. He noted, however, that the Government has had to turn to an indirect taxation system to compensate for that “gift”.

“The system is working,” he added.

Shaw also noted an increase in foreign direct investments (FDIs) in the areas of tourism, port expansion and business process outsourcing. He said that FDIs had increased from US$580 million in 2014 to US$866 in 2016.

Shaw argued that this was indicative of the prudent economic management “and a willingness to stay the course towards growth and development”.

He said that Jamaica's Doing Business ranking was now 67 out of 190 countries ranked by the World Bank.

He also spoke to the stability in the exchange rate, noting that it had “depreciated by a mere 1.7 per cent” over the past year.

“This, of course, has positively impacted on containing the cost of living and contains our debt service costs in relation to foreign investments,” he stated.

He also pointed out that the Government had increased simultaneously the social security payments through the Programme of Advancement Through Health and Education by 30 per cent with an added $7 billion to assist more than 300,000 vulnerable Jamaicans.


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