Briefing | Synopsis of the 2019-20 Budget
An estimated $803 billion in expenditures has been tabled by the Ministry of Finance and Public Service to be spent by the Government during the 2019-2020 fiscal year.This projected expenditure is approximately $30 billion more than the estimates for the 2018-2019 FY, a 4% increase presumably, taking 4% inflation into consideration.
The Government appears to be taking a different approach towards budgeting, as the current increase is opposite to the decrease that occurred last year, where the Government reduced the Budget by $31 billion, from $805.5 million spent 2017-2018 fiscal year to the $773.7 billion that was spent for the 2018-2019 fiscal year. The expenditure structure appears to be different.
How has expenditures changed?
Recurrent expenditure has increased from $423.1 billion last year to $456.7 billion for the 2019-2020 FY, but represents approximately the same 55% of the Budget for both fiscal years. Capital expenditure has increased by approximately $11 billion from $61.6 billion last year to $72.1 billion for the 2019-2020 FY, increasing from 8% of the Budget last year to 9% this year. Debt servicing is estimated to be $274.4 billion, compared to $289 billion last year. Debt servicing this year accounts for 34% of the Budget, 3% less than the 37% last year.
What about revenues?
Total revenues from taxation are estimated to increase by $57 billion from $518.4 billion last year to $575.7 billion this year. Non-tax revenue is estimated at relatively $60 billion, the same as last year; revenues from capital sources are estimated at 3.1 billion, compared to $16.7 billion last year; and grants are estimated to generate $5.6 billion in revenue, a $3.5 billion decline compared to last year. Other revenues are approximately $130 billion.
Is the Budget balanced?
With an estimated expenditure bill of $803 billion and revenues of only $644 billion, the Government will have to borrow the remaining $160 billion approximately for the 2019-2020 fiscal year. Last year, the Budget was more balanced. The government only tabled to borrow $103 billion. As the nation’s debt-to-GDP ratio and debt-servicing amounts have been falling, the Government has decided to borrow more this year to offset an increase in this year’s budgetary expenditure.
The stock of debt will increase.
Jamaica should’ve continued to cut spending within its means if the country was really serious about debt reduction. Total national debt was estimated at $1.95 trillion and is expected to increase to $1.96 trillion at the end of March 2019. External debt was estimated at $1.18 trillion and was expected to increase to $1.21 trillion by the end of March 2019. If the stock of debt is expected to increase and GDP ratio is expected to fall, we expect more spending areas that might facilitate an increase in GDP.
How does the country plan to combat crime?
Crime is a big issue now and more resources have been allocated to deal with issues of national security. Approximately $20.2 billion has been allocated for capital projects to assist the Ministry of National Security reduce crime in the 2019-2020 fiscal year; $14 billion to acquire specialised equipment; $1.7 billion to the Citizen Security and Justice Programme, and the remainder for construction of facilities, etc.
What other spending items are earmarked?
Overall, $18.4 billion has been earmarked for infrastructural development, $4.7 billion to complete work along the Mandela Highway, and $8.4 billion for the South Coast Highway Improvement Project; and $41.1 billion for environment resilience and climate change.
The Programme of Advancement Through Health and Education is expected to receive $8 billion. The Jamaica Social Investment Fund is expected to get $1 billion to manage projects and continue education and training; $3.74 billion is earmarked to go towards health care; $1.25 billion is earmarked for education; $3.1 billion for public-sector transformation; and $752 million for agricultural projects.
The country tabled a similar Budget last year. The significant change appears to be in the area of national security, given that crime has been a major topic of concern. The issues surrounding crime, however, are deeply rooted in the structure of the economy and require an overarching, integrated approach to change the mindset of criminals and violent crimedoers. Community-based policing has an important role to play.
- Andre Haughton is a university lecturer and prospective candidate for the People’s National Party. Email feedback to email@example.com.