Keep capital expenditure in line with Budget – EPOC co-chair

THE ECONOMIC Programme Oversight Committee (EPOC) is encouraging the government to keep capital expenditure in line with the Budget for the remainder of fiscal year 2017-18, given its importance as a main driver of economic growth.

Expenditure for the first four months of the fiscal year, April to July, was $6.9 billion or 3.8 per cent below budget.

Recurrent expenditure accounted for $6 billion of that amount, while capital expenditure was $800 million below budget, according to Keith Duncan, co-chairman of EPOC.

Noting that capital expenditure in the last fiscal year was about $42 billion, while interest payment on the national debt was about $138 million, Duncan said that “we would like to see capital expenditure much higher, but as a country we can’t afford it, because we have to take our debt levels down.”

In that regard, he said that “whatever we have budgeted for capital expenditure, which a very important investment in our economy that leads to growth, we would like to see that capital expenditure being done. It is important for infrastructure such that we reduce the risks that have occurred in terms of damage.”

Duncan added that there will be a multiplier effect through the economy if the investment is made, and made in a timely manner.

Revenue and grants of $166.2 billion for the first four months of fiscal year 2017-18 exceeded the target of $160.3 billion, Duncan told a briefing at JMMB’s offices in New Kingston, where he released the ninth communique of EPOC yesterday.

Tax revenues of $153.6 billion outperformed the budgeted target by $5.5 billion, the communique said, noting that “revenue performance remains encouraging and strengthens our confidence of sustainability throughout the fiscal year”.

Consequent on the performance of revenue and grants, and the underexpenditure for the period under review, the primary surplus of $30.6 billion over the four-month period exceeded the $29-billion target.

“We are encouraged by the performance of this significant fiscal metric, signalling continued fiscal discipline by the Jamaican Government,” said the EPOC communique.

Duncan said that nonborrowed reserves at the end of June stood at US$1.82 billion, exceeding the June floor target of US$1.52 billion.

The non-borrowed reserves, a structural benchmark under Jamaica’s three-year standby agreement with the International Monetary Fund (IMF), continues to grow, reaching US$2.02 billion at the end of July.

Duncan said an IMF team is now in Jamaica conducting the June review, the second under the precautionary standby agreement.

“Based on the available information, the Economic Programme Oversight Committee is comfortable that this review should be successful,” the communique said.

He said that all the fiscal, monetary policy and financial sector structural benchmarks have to date been met.

The EPOC co-chairman said the Government has also met the nine structural benchmarks for public-sector transformation, public bodies and public service reform through end-August 2017.