Budget Debate: Phillips stresses growth, $90b capital programme
Finance Minister Dr Peter Phillips said projections for baseline growth for the Jamaican economy in the upcoming fiscal year will be 1.6 per cent, driven in part by critical strategic investment projects, among other initiatives.
Capital expenditure by the State, he said during the opening of the Budget Debate, will include $30.5 billion from central government and another $59 billion by self-financing public bodies, including the National Housing Trust, the Urban Development Corporation, the National Water Commission, Port Authority of Jamaica and the Jamaica Civil Aviation Authority.
"The fourth plank of the growth agenda are the investments in strategic projects that can act as catalysts to accelerate the growth momentum, expand employment and enhance, in the near term, the productive capacity of the country," Phillips told lawmakers, as he outlined capital expenditure plans.
Phillips said that notwithstanding the challenging fiscal environment since 2012-13, resources will be provided to facilitate completion of several major infrastructure projects, including the Kingston Metropolitan Area drainage project, the Palisadoes Shoreline and Road Project, the Transport Improvement Road Project and the North Coast Highway Project.
During FY 2015-16, he said the fiscal space will be provided to ensure implementation of projects, including new buses acquired for the JUTC; money to carry out works on select roadways and bridges, schools and other targeted development initiatives.
"The critical planks of the strategic growth agenda which we are currently pursuing may be summed up as follows: First of all, fiscal consolidation, which centres upon the reduction of the deficit and the debt; tax-reform efforts to increase investment activity; public-sector transformation; control of inflation and financial sector stability," the minister stated.
He said that the drive for growth will also involve reforms and improvements to the business environment to improve competitiveness, noting that while substantial gains have been made as reflected in the Competitiveness and Doing Business surveys, "this is still a work in progress".
Left to be completed, he said, was "reform of the financial sector and secure, sustained downward movement in lending rates, even as we broaden access to financing for business start-ups and establish venture capital funding".
Phillips hinted that those who were pressing for high growth levels within a short period were unrealistic, considering the island's structural challenges and long history of low and no growth.
"In considering the issue of growth, it is important for me to emphasise that the problem does not relate to a short-term fix of essentially cyclical conditions.
"The fact is that we do not have an already-existing productive capacity, such that all we would need to correct for are the effects of a short-term contraction in the market by spending more money to increase demand. On the contrary, Jamaica's experience of low growth has existed for a long time. Over the past four decades, growth has averaged less than one per cent per annum," he said.
Economic growth, Phillips said, involved a longer-term outlook, while noting that the current programme of fiscal consolidation will continue. The programme is centred on the reduction of the deficit and debt; tax-reform efforts to increase investment activity; public-sector transformation; control of inflation and financial sector stability.
Growth, he added, will also involve continued reduction in the price of electricity for the productive sector.