Tight spending forecasted this year
Less than a month before the Government tables the 2015-2016 Estimates of Expenditure, Financial Secretary Devon Rowe has signalled that Jamaica will continue to walk a tightrope in terms of spending under the four-year extended fund facility with the International Monetary Fund (IMF).
"We are going to have to live within our means because we can't get back to the realm of borrowing and borrowing unnecessarily. We need to engage in more strategic borrowing," Rowe told The Gleaner yesterday.
He said the type of borrowing that the country would have to pursue had to be low cost, with a different maturity profile, and that eases the burden on the fiscal, "so that we can return to a fiscal surplus and help us to repay that long outstanding debt, that high stock of debt that we have".
Commenting on the impact of declining world oil prices on the Jamaican economy, the financial secretary said as oil prices dipped, he expected household income to improve.
In addition, Rowe said as oil prices fall the Government is anticipating an impact on revenue collection.
"We expect as well to see some reduction on the expenditure side of the Government's operation. We expect to see, over time, street lighting costs falling as well."
According to the chief technocrat in the finance ministry, the cost of doing business over the medium and long term would decline for businesses and allow them to become more competitive.
"At this point, it is not conclusive what the final outcome will be, but we think in the medium term it will be beneficial to Jamaica," Rowe said of the impact of declining oil prices.
He said the Government has been managing circumstances that it could not have contemplated when it began the IMF programme.
"It comes down to the quality of the management that we put to it in terms of how we resolve the issues that emerge. So far, I think that we have been reasonably successful in managing on a day-to-day basis and I think as we move into the future, we will continue to manage through all these difficulties," Rowe said.
Use current oil prices
Rowe suggested that the Government could use current oil prices as it planned the budget for the 2015-2016 fiscal year.
"The budget this year will have to have some amount of flexibility in terms of how we go forward," he added.
Meanwhile, Rowe's boss, Finance and Planning Minister Dr Peter Phillips, told journalists during a special Jamaica House media briefing yesterday that tax revenues were below target as a result of the underperformance of corporate taxes and in the general consumption tax category. He said this was due primarily to lower quarterly declarations by several companies.
Phillips said this was attributed to delays in the preparation of accounts by many companies to fall in line with the new fiscal regime that was introduced last year.
He said Tax Administration Jamaica would be moving to increase revenue intake by using increased legislative powers available to it by accessing third-party information and the publication of offenders and improvement of taxpayer information and education.
Phillips said the tax out-turn was above last year's intake but less than four per cent below the targeted range.
Parliament will prorogue on February 17 and the Estimates of Expenditure will be tabled two days later, the same day the ceremonial opening of Parliament will take place where the governor general will present the Throne Speech, which provides a synopsis of the administration's programmes and legislative agenda for the new parliamentary year.