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$4b cut from budget

Sunday, June 22, 2014    

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THE Government has apparently cut $4 billion from its budget this fiscal year.

The reduction mostly comes from lower projections for interest costs, which is expected to be $3.2 billion less than was calculated in April.

Another $700 million was cut from capital expenditure.

The latest projections were presented in documents released by the International Monetary Fund (IMF) following its fourth review of Jamaica's extended fund facility and approval of a US$70.9 million disbursement.

It still means that Jamaica will see a fiscal deficit of $7.5 billion this year should revenue collections come in on target.

But the new data also show a $12-billion, or three per cent increase in tax projections for next year, although it doesn't say where the additional revenue will come from.

Additionally, non-tax revenue projections for next fiscal year was increased by $5.3 billion, or 16 per cent.

Wages and salaries for next year are also expected to be lowered by $1.5 billion, or one per cent from original projections, in order for the Government to meet the IMF requirement to cut the public sector wage bill to nine per cent of GDP by March 2016.

"With upfront fiscal adjustment and the steadfast implementation of an ambitious and wide-ranging structural reform agenda, the initial dividends from the reorientation of policies are emerging," said an IMF press statement on Jamaica passing its fourth test. "The government's economic strategy aims to boost growth and employment, place public debt on a sustainable path, restore competitiveness, and strengthen the social safety net.

"Its full implementation will bring about tangible benefits for Jamaica and its people."

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