D r Nigel Clarke is scheduled to open the 2022/23 annual budget this afternoon at Gordon House full of confidence that the economic decline, which started in 2020/21, has ended.

According to Clarke, despite the anticipated negative effects of Russia’s invasion of Ukraine and the unrelenting novel coronavirus pandemic, the economy is projected to grow by 7.9 per cent when the current fiscal year ends on March 31.

“Good fiscal management enables a country to reasonably weather economic shocks when they emerge, and to recover,” he said in his Fiscal Responsibility Statement tabled in Parliament recently.

“It is good fiscal management when a Government can respond in a timely manner to help to shield its citizens from the aforementioned shocks and protect, as far as possible, the vulnerable society,” the minister said.

While admitting to the potential threats to inflation due to the Ukraine war, considering the effect of dramatic increases arising from a reduction of Russian oil exports, which could trigger an increase to the deadly 2008 figures of as much US$130 per barrel, and reduced agricultural exports from the Ukraine, the Government is evidently supportive of a regional call for the gradual reduction in dependence on imported fossil fuels.

And, given the Bank of Jamaica’s mandate to maintain low, stable, and predictable inflation rates, Clarke noted that the bank had adjusted its “broadly accommodative monetary policy stance” by increasing its policy rate from 0.5 per cent in September 2021 to 2.5 per cent as at January 2022, reflecting a tightening of the signal rate by 200 basis points.

Clarke has also assured the nation that there is no need for alarm about the possible effect of the Ukraine crisis on Jamaica’s debt situation.

“We have made some amount of provisions for the environment in which we are, and those provisions are guided by input from the central bank,” he told last Tuesday’s opening session of the Standing Finance Committee of the House of Representatives.

In fact, according to him, “it should be noted that the economic recovery (for 2021/22) could have been stronger, were it not for a fire at Jamalco in August 2021”.

He said COVID-19 has exposed structural issues and weaknesses in the society that must be addressed as quickly as possible; included among those weaknesses was the number of “unbanked citizens” in Jamaica.

Clarke noted that while capital expenditure in the 2022/23 budget has been significantly curtailed since 2020, due to the fiscal impact of the pandemic, with recovery under way, Government will be seeking to boost capital expenditure in 2022/23 by 20 per cent to ensure that growth is maintained. This represents a 0.2 percentage point increase as a per cent of GDP.

Debt service increased by 3.3 per cent over 2021/22 payments, reflecting an increase in payments due on the domestic debt, as external debt payments for the year represent a decline over 2021/22. Included in the non-debt recurrent expenditure for the year is a provision to commence implementation of the compensation restructure for public servants on the central Government’s budget.

Opposition spokesman on finance Julian Robinson will respond to the minister on Thursday as the budget debate continues.