‘A good budget’
CaPRI says 2017/18 estimates of expenditure fiscally responsible
THE public policy think tank, the Caribbean Policy Research Institute (CaPRI), has described the Government’s estimates of expenditure for 2017/18 as “fiscally responsible”.
Co-executive director of the not-for-profit institution, based at The University of the West Indies’ Mona campus, Dr Damien King, told a media luncheon at Courtleigh Hotel, New Kingston, yesterday, that there is evidence in the budget that it is both “fiscally responsible” and meets the long-term objectives of the current International Monetary Fund-supported economic programme.
Dr King also noted a “significant increase” in spending on social programmes, including the Programme for Advancement Through Health and Education (PATH), which he noted had benefited from a near 50 per cent increase in financial support; as well as spending supporting the economy, including $10 billion on infrastructure under the Major Infrastructure Development Programme.
The luncheon was co-hosted by Dr King and former member of the Senate, Imani Duncan-Price, who is co-executive director of the institution.
Dr King noted that years of running large fiscal deficits of 3-4 per cent of gross domestic product (GDP) came to an end with the previous Extended Fund Facility (EFF) agreement with International Monetary Fund (IMF), and Jamaica has been moving towards a “more or less” balanced budget since then, under the new Stand-By Arrangement.
“When you are in the order of less that half a percentage point within a balanced budget, then you are fiscally sustainable, and the new budget for 2017/18 continues that trend,” he stated.
He added that it was also very important that the estimates continue to aim at hitting the primary surplus target of seven per cent of GDP, which will ensure that the budget does not create future problems for the economy.
He said that the estimates were also consistent with continued reduction in Jamaica’s debt-to-GDP rating, which should end fiscal year 2017/18 at 116 per cent of GDP, coming from 147 per cent of GDP when the EFF agreement was signed with the IMF in 2012/13.
He noted that the debt to GDP was at 120 per cent of GDP two years ago. However, the Government had entered the capital market in 2016 for loans, prior to paying off the next tranche of debt becoming due, which created a spike in the debt. However, he added that the debt should fall back in line by the end of the current fiscal year.
King said that in anticipation of that debt being paid up, and consideration that fiscal targets are going to be met in the budget for 2017/18, CaPRI was convinced that Jamaica would continue the reduction of the debt into 2017/18.
“According to our estimates, this is consistent with the continued reduction of Jamaica’s debt to GDP, which should close the fiscal year at 116 per cent of GDP. So the country is on track for debt reduction, and this is more evidence that the budget is fiscally responsible,” Dr King stated.
Minister of Finance and the Public Service Audley Shaw had informed the House of Representatives, while opening the budget debate on March 9, that following the adoption of the new public debt definition, Jamaica would be closer to achieving its sustainable legislative debt target within the next eight years, or sooner.
This new definition, which comes into effect on April 1, will be consistent with the definition being used by the IMF under the precautionary Stand-By Arrangement.
Shaw had informed the House that the public debt was expected to be 115 per cent of GDP at the end of the 2016/2017 fiscal year, compared to 124.1 per cent under the old definition.