COVID, wage hike drive up Budget
Published:Wednesday | January 12, 2022 | 12:12 AMSteven Jackson/Senior Business Reporter
The Government piled an additional $25.8 billion on to its recurrent budget for this fiscal year, which ends in March.
Finance Minister Dr Nigel Clarke tabled on Tuesday a second Supplementary Estimates showing plans to spend $893.05 billion for the fiscal year ending March 2022, up from $867.3 billion.
The $25.8 billion rise in the recurrent budget comprises $8.2 billion for non-debt recurrent expenditure and $17.6 billion for debt servicing, of which $12.6 billion represents principal repayment.
Clarke said that while the recurrent budget has increased, the capital budget remained unchanged. The additional expenditure arises mainly from public-sector wage increases and COVID-19 compensation to health workers.
“Since the tabling of the first supplementary in October, much has transpired within the realm of Government in Jamaica. At the point of the first supplementary, there was no final settlements with any of the public-sector bargaining groups,” Clarke said in Parliament.
He said that the Government had accounted for these increases in a line item in the first Supplementary Budget. Now, however, it has to allocate those resources to the respective ministries, departments, and agencies, and that requires parliamentary approval.
“It was captured under contingencies in the Ministry of Finance. Since then, 31 bargaining groups have settled, and this is the primary reason for the second Supplementary Estimate,” he said.
Only two major public-sector groups have outstanding wage talks – the police and teachers. Clarke declined to make any declarative statement on those groups at this time.
Meanwhile, also captured under contingencies was an additional $5 billion to the COVID Allocation of Resources for Employees (CARE) component of the Social and Economic Recovery and Vaccine Programme for Jamaica (SERVE).
The Supplementary Budget also increases the allocation for COVID-19 healthcare employers who are working longer hours. The Budget also addresses the incomplete accounting of premiums for the island’s newest hurricane and heavy storm disaster fund or catastrophe bond. Clarke said that although the bond was issued earlier in the fiscal year, it was not fully captured on the Budget.
“It should be recalled that the bond premium is covered by grants from the governments of the United Kingdom, Germany and the United States,” he said.
Since the first Supplementary Estimates, domestic interest rates have increased and the currency has depreciated, resulting in increases in the debt-service requirements. Specifically, the Bank of Jamaica increased the benchmark rate from 0.5 per cent to 2.5 per cent last year as a means of slowing down inflation. The higher rates, however, have led borrowers, including the Government, to pay more for funding.
Additionally, Clarke said that the Government assisted the National Water Commission and the Central Wastewater Treatment Company to repay a maturing Government-guaranteed debt.
The additional expenditure will be financed through $11.2 billion in additional revenue flows, $5.3 billion in additional loan receipts, and utilisation of an additional $9.2 billion from prior-year cash resources.