Government may rejig allocations as pandemic takes grips – minister
Published:Monday | March 30, 2020 | 12:13 AM
THE JAMAICAN Government is exercising a number of budgetary options as it grapples with the effects of the COVID-19 pandemic.
Finance and the Public Service Minister Dr Nigel Clarke says one option is the reallocation of resources in the first quarter of the 2020-2021 financial year, which begins in April.
“We will be looking at the expenditure that we have and reprioritising and reallocating. Because of COVID-19, things that we would have had to spend on in April, May and June, then we may not,” Clarke said as he fielded questions at the Gleaner Editors’ Forum last Friday.
He was pointing to the coincidence of benefits from recent policy moves, including the privatisation of state entities and civil service reform. Clarke said that the Government has been aggressive in harnessing resources to pay down debt by listing companies on the Jamaica Stock Exchange and raising revenues for the Government. He said that there were also benefits to reintegrating agencies into central government and harvesting the cash..
Fiscal space
“Because of that, we were in a position in the midst of the greatest crisis that Jamaica has ever faced to find fiscal space. Had we not done that by accumulating the reserves to use to reduce the primary surplus without affecting debt trajectory up until then, we would not have had the cushion,” Clarke said.
The finance minister would not be drawn on the question of the worst-case scenario of the COVID-19 pandemic, but said that it was clear that Jamaica will sustain a massive economic hit as far as gross domestic product - the total goods and services produced - is concerned. He predicted that the first quarter of the upcoming financial year, between April and June, would see tourism at a standstill, which will mean a dramatic reduction from the year prior and which will have a drag on the rest of the economy.
Clarke also warned that demand would be constrained because tens of thousands of students and workers were remaining at home, curtailing economic activity - a situation that could persist into subsequent quarters.
The finance minister said that in the event of a severe economic contraction, Jamaica had wiggle room that allowed for the suspension of fiscal rules. That move, he said, would be subject to verification from the auditor general and would allow for accommodations where there was a fall in revenue or for spending in areas of need.