Mar 2006 Financial News

Jamaica-$1b slashed from budget

Mar 08, 2006

The government (Jamaica) yesterday tabled the first supplementry estimates for 2005/2006 characterised by huge under-expenditure in funds for exchange and interest rates, but with heavy cuts in several ministries leading to an overall reduction in spending of just under $1 billion.

According to the estimates, tabled in the House of Representatives by minister of finance and planning Dr Omar Davies, the total expenditure for the current financial year, which closes at the end of this month, will be $877.6 million less than the $347-billion which was approved last April.

The revised figures now show a total of $346.2 billion approved for both recurrent and capital expenditure, split into $189.4 billion for recurrent spending and $156.7 billion for capital spending, including programmes financed by overseas institutions.

In the supplementary budget, there was an increased allocation for recurrent expenditure of $2.2 billion, mainly to cover increased salaries for public sector groups like the police, nurses and the military, but this was undercut by the $3.1-billion in reduced capital spending.

Among the main areas hit by the reduced spending were education, including the school feeding programme; information technology training; the Northern Jamaica Development Project; solid waste collection; minor water supply schemes; and flood damage rehabilitation.

However, some cuts in educational development, as well as flood damage rehabilitation, were offset by capital increases, including the $1.4-billion transferred from the National Housing Trust Fund for educational transformation and rehabilitation projects being financed under the Ministry of Local Government.

In the Ministry of Finance and Planning, additional funding of over $4 billion was provided to meet loan repayments and prepayments, higher than projected salary bonds claims, debt repayments, and higher than projected exchange rates on multicurrency loans.

But there was also under-expenditure triggered by lower than projected foreign exchange rates, contingencies and interest rates, resulting in huge savings on interest rates on both internal and external loans.

In terms of recurrent expenditure, the Ministry of Finance and Planning's expenditure was reduced from $5.5 billion to $4.4 billion and its capital budget from approximately $146 billion to $143 billion.
The Ministry of National Security's recurrent allocation was increased from $4.9 billion to $5.4 billion, including $158 million to pay for voter reverification and nearly $1 billion more for the police, $245 million to cover increased salaries and travel allowances for the military. The ministry's capital allocation moved from $300 million to $321 million, including $15 million for additional motor vehicles.

The Ministry of Education, Youth and Culture got $1.1 billion more (recurrent) mainly to cover salary adjustments; and $1.3 billion more in capital expenditure related to the education transformation fund financed by the NHT's $5 billion grant.

However, capital expenditure in this ministry also showed huge cuts including $393 million from the upgrading and repairing of high schools and provision of equipment and furniture, and a $315-million cut in secondary schools upgrading.

The Ministry of Local Government, Community Development and Sport had its recurrent budget increased by approximately $1.4 billion, including funds to meet additional MOU costs, outstanding statutory deductions of $47.3 million, $157 million for garbage disposal services and to clear outstanding advances from the post-hurricane period, and $100 million to pay for social water. The ministry also received an increase in capital expenditures of $200 million for emergency road repairs.

Despite a $73-million increase in its recurrent budget, mainly for operating and salary expenses, the Ministry of Agriculture had an $81-million cut in its banana support project and $30 million cut from the Eastern Jamaica Support Project.

The Ministry of Health received $1.1 billion more in recurrent funds, mainly for salaries and health delivery.
The Ministry of Industry and Tourism's budget was increased from $1.1 billion to $1.2 billion due mainly to a $50-million addition for overseas advertising.

The Standing Finance Committee of the House of Representatives, which includes all MPs, will meet this morning at Gordon House to review the figures, which will be debated when the House meets at 2:00 pm.

Balford Henry
Observer write
The Jamaica Observer
http://www.jamaicaobserver.com/news/html/20060307T220000-0500_100187_OBS___B_SLASHED_FROM_BUDGET_.asp
Wednesday, March 08, 2006.