THE Ministry of Finance performed a major juggling act in its supplemental budget, slashing $12.7 billion from recurrent expenditure and another $6 billion from capital spending to meet some of the $25 billion more needed to pay additional debt expenses and salary increases, among other things.

The net effect is that the central government will have to find $6 billion more in revenue to meet its fiscal target for the year that ends March 31, 2010, or see a larger than planned deficit.

The total planned expenditure now stands at $561.4 billion.

Yesterday, Finance Minister Audley Shaw tabled, in the Parliament, the First Supplementary Estimates of Expenditure for the current fiscal year.

Thirty-five of the 57 ministries and agencies listed in the document had to slash their budgets, while 15 were left unaffected.

This was largely done to meet $16.2 billion more needed for interest payments brought about by “higher than projected interest rates” during the fiscal year to date.

The Bank of Jamaica, in an effort to hold back a runaway dollar, raised – by December last year – interest rates on its certificates of deposits by 3.5 to seven percentage points to 17 to 24 per cent, depending on tenor.

Since then, the central bank has gradually dropped the rates to between 12.5 per cent and 17 per cent, but not before it realigned the entire debt portfolio of the Government towards higher yielding instruments and hence higher interest payments.

The next major increase to the budget was that of the Ministry of Education, which saw a net increase of $3.9 billion, primarily due to upward adjustments to be made for salaries of teachers across primary, all-age and secondary schools – $3.7 billion has been allocated for that purpose – while another $600 million was added for the school feeding programme.

The General Council of the Jamaica Teachers’ Association is this Saturday to decide whether or not to accept Government’s proposal to pay, in three tranches, the approximately $8 billion owed to public school teachers as part of a reclassification in 2007.

The Government had offered to pay $4 billion of the amount in May and July of 2010; another $2.5 billion in June 2011 and the final payment of $1.5 billion in April 2012.

The provision in the supplementary estimate was apparently made to meet the first payment within the current fiscal year, which ends March next year.

At the same time, a provision of $430 million was made to “meet the 15 per cent increase in salaries to nurses”, but there was no mention of how it might impact negotiations currently underway between the Nurses Association of Jamaica and the Government.

Yesterday, members of the NAJ, headed by their president Edith Allwood-Anderson, took to the streets outside Gordon House even while the supplementary estimates were being tabled.

The nurses are also seeking to effect the results of a reclassification exercise undertaken four years prior.

There was no additional allocation relating to salaries made for the police – who are also agitating for increases – although there was a net increase to the constabulary of $530 million.

That reflected reallocation of funds primarily towards fighting corruption and implementing a strategic plan.

For instance, $589 million was taken from human resource management and another $353 million was shaved from the budget of general police function, which involves the management of the five area headquarters across Jamaica.

At the same time, $500 million more was put towards anti-corruption and another $479 million was reallocated towards implementation of strategic review recommendations and policy strategy.

An additional $213 million was budgeted for the purchase of weapons and ammunition.

Overall capital spending was cut by $6 billion, with the transport ministry seeing the bulk – $2.8 billion – of the cut.

Just over $1 billion was also cut from the education transformation budget, which primarily is focused on improving educational infrastructure.