By Caribbean News Global contributor
KINGSTON, Jamaica – Minister of finance and the public service, Dr Nigel Clarke, tabled the estimates of revenue and expenditure in the House of Representatives on Thursday, February 18, proposing to spend a total of $830.8 billion for the 2021/22 fiscal year. The estimates as presented is formulated around the continuing global and local impact of the COVID-19 pandemic and the efforts to counter its spread and restore higher levels of economic activity.
Health and economic crisis
“The COVID-19 pandemic generated both a health crisis and an economic crisis during the current financial year 2020/21, minister of finance Dr Clarke said. “The pandemic has impaired the health of thousands of Jamaicans, strained the health systems and led to the reduction of economic activity across Jamaica including the virtual shutdown of the tourism sector for much of the year. This translated into a significant loss of revenue for the government and, simultaneously, to the need for new expenditure to address the health consequences while cushioning the social and economic impact.”
“The hit to the revenues in FY 2020/21 is estimated at an unprecedented decline of 11.3 percent or $73.3 billion as compared with the FY 2019/20 inflows. Despite this overall expenditure is programmed at 3.8 percent or $24.2 billion higher than the FY 2019/20 spend,” he explained. “Projections for recurrent expenditure is $247.8 billion; compensation for employees, $239.2 billion; capital expenditure $54.2 billion; debt servicing $272.2 billion; and loans to public bodies $17.3 billion.”
He elaborated: “To enable the government to pursue the required expenditure in the face of the unprecedented revenue fallout, the government requested and obtained suspension of the fiscal rules for FY 2020/21, following an amendment of the Financial Administration and Audit (FAA) Act that included an adjustment of the target date for achievement of debt/GDP of 60 percent (or less) from FY 2025/26 to FY 2027/28.”
While planning for recovery minister of Dr Clarke, noted that this budget follows a year in which Jamaica experienced the worst economic contraction in its history due to the measures necessary to slow the spread of the coronavirus.
“Inclusive of the current January – March 2021 quarter, by the end of March we will have experienced five consecutive quarters of economic decline. We lost $73 billion in revenues last year, we had to suspend the fiscal rules and we were fortunate to have the ability to draw down on substantial cash resources last year which we were warehousing to accelerate debt repayment,” he added. “In previous downturns, economic contractions have lasted several years in a row. In the global financial crisis that began in 2008, for instance, the economy declined for three consecutive years and 11 out of 12 quarters. In the 1970s, we experienced five consecutive years of economic contraction from 1976 to 1980 inclusive.”
“Our task this year is to begin the economic recovery. We aim for economic recovery to begin the upcoming fiscal year and furthermore to begin this upcoming April – June quarter. Our budget, within the strictures with which we have to operate, and to the greatest extent possible, is aligned with this objective,” he said.
‘Building Forward … Stronger Together’
Governor-General Sir Patrick Allen called on all sectors of society to join forces to rebuild and reinforce the economy, post-coronavirus (COVID-19).
“We must not only rebuild what we have lost; every Jamaican, every entrepreneur, every civil servant, every business, and every government agency must build forward…stronger together,” he said delivering the Throne Speech at the ceremonial opening of parliament, on Thursday, February 18, under the theme ‘Building Forward … Stronger Together’ – prefaced the following:
“Prior to the pandemic, we had forecasted 1.2 percent growth for fiscal year 2020/21. The past financial year has shown us the need for strength and resilience. We have ensured that we have used a risk-based management approach that is evidence-based, measured, situationally appropriate and proportionate. We have developed strategies for coping and recovering.
“In April 2020, the prime minister appointed the COVID-19 Economic Recovery Task Force – a multi-sectoral Task Force to help chart Jamaica’s economic recovery from the fallout and devastation caused by the COVID-19 pandemic. The recommendations of the Task Force will be our guide to emerging stronger and better than before.
“Notwithstanding setbacks caused by the pandemic, we must recommit to our 2030 vision and summon our energies, talents, and resources as we march forward to achieve it. We must never lose focus on creating a safer and more caring society where all can achieve their true potential.”
Reform with ambition
“Our goal cannot simply be to return Jamaica to our pre-COVID-19 reality. We must go beyond this and emerge economically and socially stronger by addressing fundamental gaps that have been exposed, and exploiting opportunities that arise.
“The COVID-19 Economic Recovery Task Force recommended several policies and initiatives that will guide our recovery effort, including;
- Greater focus and shift of capital expenditure towards activities that maximise local value-added;
- Accelerated capital investment in public health capacity to serve the daily healthcare needs of the population and respond to crises, thereby ensuring our resilience;
- Accelerated investment in public education infrastructure and skills training; with greater focus on science, technology, engineering and mathematics (STEM);
- Increased public investment in technology and broadband connectivity;
- Expansion of the social safety net, while at the same time ensuring its efficiency and transparency;
- Reconfiguration and diversification of the Jamaican economy by supporting the creation of new industries and strengthening local linkages.”
The full text of ‘Building Forward … Stronger Together’ is available here.