$6 billion spending cut

$6 billion spending cut

Budget to focus on debt reduction

Wednesday, February 12, 2020

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THE Government yesterday tabled its budget for 2020/21, which favoured a continuation of its efforts to reduce the country's debt to GDP ratio, rather than laying the foundation for what was expected to be an election budget.

The new estimates of expenditure, tabled by Minister of Finance and the Public Service Dr Nigel Clarke, is just more than $6 billion below the net provisions being spent in 2019/20, which should close at $859 billion after two supplementary estimates.

The 2020/21 estimates should end up at approximately $852.7 billion, including $778.4 billion in net recurrent (housekeeping) spending and $74.2 billion in net capital spending, compared to the $859 billion which should be spent by the end of 2019/20 on March 31.

The $852.7 billion is made up of $453.7 billion in recurrent expenditure and $74.2 billion to capital expenditure, plus an additional $287.8 billion which will be used for debt servicing.

There was no general election indication in those figures, and Dr Clarke explained that the restricted spending was due to a reduction in debt servicing costs. Public debt at the end of the current financial year 2019/20, is estimated to be 91.5 per cent of GDP, down from 94.4 per cent at the end of 2018/19.

“The financial year 2020/21 proposed financing for both central government and public bodies is expected to generate a further reduction in public debt to 87.2 per cent of GDP by the end of 2020/21 fiscal year,” Clarke noted.

The new budget has allocated the Ministry of Economic Growth and Job Creation some $11.4 billion in recurrent spending, including capital allocations to aid the Special Economic Zones, land infrastructure and physical development, climate change and increased financial support for micro, small and medium enterprises investments by $830 million during the fiscal year.

Some $3.2 billion will also be spent in capital aid for land, infrastructural and physical development, including squatter management, road repairs and infrastructure development.

The city of Montego Bay should benefit from the completion of its perimeter road, as well as the Closed Harbour Beach, and funds have also been allocated for further work on planning Jamaica's third city.

Other allocations include: $326 million for land titling; $3 billion payment for the use of street lights; a refund of general consumption taxes owed to Total and Rubis petrol companies, which was incorrectly paid into the Consolidated Fund; $1 billion for Statistical Institute of Jamaica to produce a population and housing census; and $378 million to meet outstanding debt to the National Housing Trust.

The estimates will be reviewed by the Standing Finance Committee of the House of Representatives on February 24 and 25 and the 2020/21 Budget Debate will commence with Dr Clarke on March 10 or 12.

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