The entertainment and youth sector will see a 40 per cent hike in capital projects totalling $734 million for fiscal year 2010/11 despite the recession.

The Ministry of Youth and Culture will facilitate $218 million while the Culture, Health Arts, Sports and Education Fund — or CHASE Fund — will facilitate $516 million, according to the just released government estimates of expenditure.

The Ministry of Youth and Culture, the main overseer of these projects, will finance only $12 million, whilst multi-lateral organisations will finance the remaining $206 million. Major projects involve the construction of youth development centres and sponsoring training for at-risk youth. Interestingly, the ministry approved spending for $132 million in fiscal year ending March 2010, but only spent $14.8 million — in other words the ministry halted the projects and carried them forward for the upcoming fiscal year.

Unfortunately, the ministry will see a 14 per cent reduction in its recurrent budget (which pays for wages and salaries) to $1.8 billion, which is greater than the overall cut in the Government’s budget at 10 per cent to $339.6 billion.

At the same time, the CHASE Fund expects its disbursements to remain flat at $1.06 billion for fiscal year 2010/11 versus $1.03 billion a year prior, but the arts will see a 21 per cent increase in disbursements at $180 million, while sports will see a reduction of 7.6 per cent to $336 million. Overall the projected budget for the arts and sports within the CHASE Fund has increased by $4 million to $516 million.

The Jamaican economy has been in recession amidst the world economic fall-out. Additionally, Government has to outperform by nearly $4 billion its original revenue target for February and March or risk failing the International Monetary Fund (IMF) test this May. At stake is a US$100-million disbursement from the IMF, which it will not give to the Government should Jamaica not meet performance targets for March 31. But even then the implications for market confidence, among other things, might be more far-reaching should Jamaica fail the IMF’s first test.

Since February, the economy had been infused with funds geared at increasing the stability of its currency and accounts. It received a US$1.2-billion (J$107.4-billion) stand-by arrangement with the IMF last month, and an additional US$800 million (J$71.6 billion) worth of multilateral loans — US$200 million from the World Bank US$200 million and US$600 million from the Inter-American Development Bank (IDB). A measure of the increased confidence was the stability of the dollar and the 330 basis point dip in the yield curve on Government of Jamaica Global Bonds so far in 2010.

In mid-February, rating agency Fitch upgraded Jamaica’s long-term foreign and local currency ratings to “B-” from “CCC” and “C” respectively, with a stable outlook. Rating agency Standard & Poors followed a week later, hiking its long-term foreign and local currency sovereign credit rating on Jamaica to “B-” from “SD” or “Selective Default” with a stable outlook.

Then in March, rating agency Moody’s upgraded Jamaica’s local and foreign currency bond ratings to B3 from Caa1 on foreign currency and Caa2 on local currency, which it said reflected “diminished credit risks following the domestic debt exchange completed in February”. Jamaica had executed a voluntary debt swap, reached as a conditionality of the IMF agreement. The debt swap registered a participation rate of more than 99 per cent and will result in Government saving some $40 billion on interest cost payments in its first year — due to a reduction in interest rates and extension of debt maturities.