ECONOMISTS have high expectations for the upcoming budget deliberations and are predicting that when Finance and Public Service Minister Dr Nigel Clarke opens the debate today he will have good news about the macroeconomy and the country’s growth trajectory.

They are, however, wary of the escalating public sector wage bill and the impact this will have on revenue growth, and are waiting to hear how the finance minister will tackle this issue.

Economist with the United Nations’ (UN) Jamaican Economy Panel, Keenan Falconer told the Jamaica Observer on Monday that he anticipates the presentation will primarily emphasise the macroeconomic gains that have been made over the last few years and the need to sustainably preserve those advances, even as the Government pursues its fiscal policy objectives.

“I believe much attention will be placed on growth-inducing initiatives in the form of greater spending on infrastructure projects, owing to an increase in the capital budget to $80 billion,” he said.

Further, as the Government’s compensation restructuring enters its final stages Falconer surmises that increasing public sector productivity could be a priority area so as to ensure revenue growth continues to match or exceed wage growth.

“I think the presentation will make provisions for increased social spending for the most vulnerable, to enable enhanced protection amidst currently elevated levels of inflation,” he added.

Economist and chief executive officer (CEO) of Quantas Capital Dr Adrian Stokes told the Observer that his primary expectation is a budget that seeks to continue the path of reducing the national debt in a sustainable way while promoting a macroeconomic environment that is supportive of equitable economic growth.

“This requires the Government to resist any temptation to spend in a way that will lead to a future increase in taxation, while at the same time make smart investments in critical areas like education, the physical infrastructure [for example roads and water], security, and health care,” he said.

Additionally, he said the Government will need to pay close attention to the wage bill, noting that public sector wages are now approximately 40 per cent of the non-debt expenditure budget and about 12.6 per cent of Gross Domestic Product (GDP).

“The wages-to-GDP number grows in future years and is a clear and present danger to the overall budget if the Government doesn’t find a way to introduce robust performance management in the public sector. This is an issue the finance minister has to address in a direct and strategic manner during the budget discussions,” he said.

Dr Stokes warned that the consequences of a burgeoning public sector wage bill are the crowding out of capital expenditure and greater future taxation.

When Dr Clarke tabled the 2024/25 budget last month he had noted that the compensation allocation of $442 billion includes an estimated amount to conclude the implementation phase of the restructured compensation system during the fiscal year.

“It must be noted that the amount budgeted for public sector compensation for 2024/25 exceeds actual compensation for 2021/22, the year before the compensation restructuring began, by approximately $200 billion. It is obvious that the Government has made a concerted effort to address historical challenges with public sector compensation, and now it is time to consolidate,” he said.

In the meantime, economist and politician Dr Andre Haughton shared a different perspective, noting that he expects the finance minister to address Jamaica’s labour and total factor productivity problems faced over the years.

“I also expect him to speak about our low literacy rate and skills retention rate [and] how the Government plans to improve on this,” he said.

Dr Haughton said he also expects Dr Clarke to talk about “our anaemic economic growth and the fact that we have not been able to accomplish a high level of growth… I also expect him to speak about our low GDP per capita and how Jamaica plans to accomplish our vision 2030 goals over the next six years”.

Dr Clarke, in his opening budget presentation, is expected to tell the nation how the Government will finance the $1.3-trillion budget.

The debate will continue on Thursday, March 14 when the Opposition spokesman on finance, Julian Robinson will make his contribution.

Opposition Leader Mark Golding will contribute to the debate on Tuesday, March 19, before Prime Minister Andrew Holness makes his contribution on Thursday, March 21.

Dr Clarke will close the budget debate on Tuesday, March 26.