Finance Minister Dr Nigel Clarke Thursday revealed the Government’s intention to spend $1.3 trillion during 2024/2025, a budget increase of approximately $230 billion, compared to 2023/2024.

According to Dr Clarke, the increased spend will be financed by revenue and grant receipts of $1 trillion, along with loans and other financial returns valued at $300 billion.

He said that wages and salaries are projected to represent 12.6 per cent of gross domestic product (GDP) in 2024/25. This is up from 9.2 per cent of GDP in 2019/2020.

The minister said that it must be noted that the amount budgeted for public sector compensation for 2024/25 exceeds compensation for 2021/22, and the year before the compensation restructuring began by approximately $200 billion.

“It is obvious that the Government has made a concerted effort to address [the] historical challenges, which is the public sector compensation, and now it is the time to consolidate,” Dr Clarke told the House.

He noted that direct allocations to the finance ministry’s capital budget have shown an increase of $226 billion.

Direct allocations to the Ministry of Finance and the Public Service have also increased by $42 billion, and there are a number of debt obligations which are also to be met this year, increasing debt servicing by more than $178 billion.

The minister said that approximately $11 billion to $12 billion is being allocated for the modernisation of Spanish Town Hospital, the continuation of construction of Western Children and Adolescents Hospital, the rehabilitation of Cornwall Regional Hospital, as well as the upgrade of May Pen and St Ann’s Bay hospitals, and the Greater Portmore and St Jago Park health institutions.

According to the Government’s Fiscal Policy Paper (FPP), which was also tabled in the House of Representatives Thursday afternoon following the colourful opening of the 2024/25 session, the Jamaican economy has continued to register positive growth outturns post-COVID-19, with 2023/24 projected to expand by two per cent.

Clarke said that annual point-to-point inflation, as at December 2023, was 6.9 per cent, and the central bank expects that inflation will remain elevated until the December 2024 quarter, when it is expected that it will return to the 4 per cent to 6 per cent range.

Clarke also suggested that, globally, inflationary pressures have remained due to the ongoing Ukraine/Russia war. However, increases in inflation locally have been driven by higher transportation costs, as well as adverse shocks on agriculture.

Responding to Dr Clarke, Opposition spokesman on finance Julian Robinson said that he is concerned about the significant increase in the wage-to-GDP ratio, saying that the public sector wage bill is understandably high based on the Government’s compensation restructuring exercise which started last year.

“While we have removed the nine per cent target that existed, I would like to know what is the projection going forward, given the challenges that we have had with growth and the fact that our growth rate tends to be in the one to two per cent [range], and while the adjustment was necessary, we are seeing a higher than normal wage-to-GDP ratio,” Robinson said.

He said that he would also like to know what the Government was doing to deal with the issue, “but, at the end of the day, we are not spending the monies that have been allocated, and that has a detrimental impact on many other things down the road”.

The House of Representatives will next meet March 5 –7 when the Standing Finance Committee will examine the budget.