A positive bottom line is unusual but not impossible:
THE JAMAICAN Government ran a fiscal surplus of $8.7 billion during fiscal year 2017-18, the first time since 2014 that its income exceeded expenditure, according to co-chairman of the Economic Programme Oversight Committee, EPOC, Keith Duncan.
“This is a very positive sign for Jamaica that we can be running fiscal surpluses at this point in time,” he said, noting that that was not the norm for the country.
Tax revenues came in at $496.9 billion, exceeding projections by $6.9 billion, while total expenditure was $7.5 billion behind budget, an out-turn which contributed to a primary surplus of $143.9 billion, exceeding the $131.4billion target by $12.4 billion.
Monetary quantitative targets has also been exceeded with non-borrowed reserves at US$2.4 billion, ahead of the target of US$1.9 billion for the fiscal year, the EPOC cochairman told a press briefing at JMMB’s offices in New Kingston on Thursday.
Inflation was contained at 3.9 per cent, outside the Bank of Jamaica’s, BOJ, target of 4.0 to 6.0 per cent, but within the programme range under the International Monetary Fund, IMF, agreement, Duncan said.
Noting that the risk to inflation is on the downside, the EPOC co-chairman said it is important to note that point-topoint inflation rate at April 2018 was 3.2 per cent.
“That is outside the BOJ range of 4.0 to 6.0 per cent and outside the IMF’s revised quantitative performance criteria band of 3.5 to 6.5 per cent, which comes into effect in June 2018,” Duncan said.
He said that while a low inflation out-turn can be received as positive, “it does have implications for programme targets,” specifically fiscal targets linked to nominal GDP, such as the debt-to-GDP ratio and 9.0 per cent wage-toGDP fiscal rule.
“Remember, real GDP plus inflation is equal to nominal GDP. So if nominal GDP comes in lower than programmed as a result of inflation being lower than within the programme range, there will be a risk to the fiscal targets,” he explained.
All seven macro-fiscal structural benchmarks for the November 2016 to April 2018 period were met, as well as the 14 structural benchmarks for public-sector transformation, public bodies and public service reform through endApril 2018.
The committee noted, however, that there were risks to the tax revenues which, during the period January through March 2018, missed the cumulative target of $148.36 billion by three per cent, or $4.5 billion, that was set in the first and second Supplemental Budgets tabled in fiscal year 2017-18.