Recovery Budget
DR NIGEL Clarke, the minister of finance and the public service, has described the upcoming 2022-23 Budget as a signal of the transition from crisis towards recovery.
The medium-term outlook, however, sees lower growth over the next three years towards 2024.
“Fortunately, Jamaica has begun the process of recovery from the impact of the pandemic within the reality of the continued transmission of the virus,” Clarke said in tabling the Government’s 2022-23 Budget for parliamentary approval on Thursday.
The Estimates of Expenditure will total $912 billion, or 2.1 per cent more than was programmed a year earlier. The recurrent budget will pay wages, salaries, and general operations.
Digging deeper into the expenditure sees non-debt expenses at $539 billion, the capital budget at $65.1 billion, and debt service of $307.5 billion.
The capital budget will rise 20 per cent to $65 billion.
Despite the higher capital spending, the country, however, will not benefit from high growth. That is because even though the capital budget will grow 20 per cent to $65 billion, it is still several times smaller than pre-pandemic levels when the country struggled to grow.
In fact, the International Monetary Fund, the island’s key donor agency, expects Jamaica to grow 4.6 per cent in 2021 fiscal year, 2.7 per cent in fiscal 2022, and 1.6 per cent in fiscal 2026.
Historically, the capital budget stood at $291.5 billion in 2017-18, dipped to $220 billion in 2018-19, and dipped further to an estimated $72 billion in 2019-20.
Going forward, however, towards 2026, the capital budget should grow from $65 billion to $87.2 billion, $95.3 billion, and $100.7 billion.
Turning to the ministries and departments, the finance ministry will receive the lion’s share of the 2022-23 Budget at $412.7 billion, mainly to pay down on debt compared to $401 million a year earlier.
It was followed by the Ministry of Education and Youth and
departments at $122.4 billion, compared to $121 billion a year earlier; the Ministry of Health and Wellness at $93 billion, or $7 billion lighter year-on-year; and the Ministry of National Security at $92 billion, from $88 billion in the previous period.
Clarke will give his substantive remarks in his Budget presentation on March 8, the third under the cloud of COVID-19
In 2021-22, the major plank of the Budget included the SERVE Jamaica programme, which offered health and financial support to vulnerable groups suffering from the pandemic.
A large part of that campaign was funded from $32.6 billion in dividends from the Bank of Jamaica, which represented 1.5 per cent of GDP. It was a onetime inflow from the central Government, which means that the upcoming Budget will not have that dividend cushion, said Clarke.
The absence of this inflow for fiscal 2022-23 will mean that “revenue as a percentage of GDP will, therefore, decline”.
“Capital expenditure would have been curtailed in 2020 due to the fiscal impact of the pandemic. With the economic recovery under way, we are seeking to boost capital investment in fiscal 2022-23 by 20 per cent, which will still lead to a total lower than pre-pandemic levels,” said Clarke.
Debt service increases by 3.3 per cent over the previous fiscal year, and the non-debt recurrent expenditure includes a provision to start public-sector wage compensation.
He sought to give greater context to the numbers, but he will have his day next month.
Clarke: “Madam Speaker, I crave your indulgence to say a few words to editorialise what I am presenting here.”
Speaker of the House, Marisa Dalrymple-Philibert: “Emphasis on the word ‘few’, Minister.”
Clarke: “I am sorry, but I brought a whole book and chapter.”
Philibert: “It is not a debate, just opening words, Minister.”