J’can economy projected to decline this fiscal year
Published:Wednesday | October 9, 2024 | 12:14 AMEdmond Campbell/Senior Parliamentary Reporter
The Jamaican economy is expected to contract by 0.2 per cent for the current fiscal year, owing in part to low tourism growth arising from a travel advisory from the United States in the first quarter of the 2024 calendar year as well as the impact of Hurricane Beryl in July.
Jamaica’s economy was initially projected to expand by 1.8 per cent for the 2024-2025 financial year.
In tabling the First Supplementary Estimates of Expenditure for the 2024-2025 fiscal year, Finance and the Public Service Minister Dr Nigel Clarke said the economy had real gross domestic product (GDP) growth of 1.2 per cent during the first quarter of this calendar year. This, he said, was followed by positive real growth of 0.2 per cent in the second quarter of the current calendar year, which was lower than projected.
Hurricane damage
However, Clarke said the economy is expected to register a 2.1 per cent decline in the third quarter of the calendar year as a result of the economic dislocation caused by the hurricane.
Beryl caused extensive damage to agricultural crops and also caused significant infrastructure damage to houses in the southern belt of the country.
The finance minister indicated that the impact of Beryl and the altered macroeconomic profile have led to an increase in total expenditure and payments by $40.7 billion which is reflected in the First Supplementary Estimates that was tabled in Gordon House yesterday.
He said the surge in expenditure is entirely due to expenses on the recurrent side of the budget where both debt and non-debt expenses have increased. Recurrent programme expenses have increased by $31.3 billion, reflecting, among other things, the additional expenses undertaken to initiate recovery from the impact of Beryl ($11.8 billion).
Recurrent programme increases include the provision of amounts related to the Government’s SPARK road programme to facilitate preparatory activities such as design and the ordering of pipes.
Wages and salaries are also slated to increase by $11.6 billion, primarily due to higher than originally included third-year costs under implementation of the restructured public sector compensation system.
Interest payments are estimated to be $9.6 billion greater than originally budgeted, primarily reflecting the impact of adjustments in interest rates.
Clarke highlighted that the additional total expenditure and payments of $40.7 billion would be financed primarily through estimated additional revenue and grant inflows of $40.2 billion, arising primarily from additional non-tax revenue flows of $33.2 billion and tax revenue flows of $5.8 billion.
The increased non-tax revenue flows, said Clarke, include the higher than estimated flows from securitisation of the Norman Manley International Airport revenue flows that are due to the Government. Utilisation of available cash resources of $4.4 billion will provide the additional financing required.
The finance minister also told lawmakers that the recent securitisation transaction facilitates the continued downward trajectory of the public debt ratio towards achievement of the 60 per cent of GDP by 2027-2028.
The debt-to-GDP ratio is projected to end the fiscal year at 67 per cent, the lowest level in nearly 50 years.