By Al Edwards, Business Co-ordinatorTHE LEADER of the Opposition, Edward Seaga is calling for a true picture of the country's fiscal deficit, declaring that current numbers cited by the Government are off base.
He was addressing a press conference held at the Jamaica Labour Party's (JLP) Belmont Road , Kingston headquarters yesterday morning.
"We need a true picture of what exactly is the fiscal deficit because it is the fiscal deficit that is the temperature of the economic body of the country," he said. "We have had a fiscal deficit ever since 1996. It has been running at 6.1 per cent of GDP (1996), 7.5 (1997), 6.7 (1998), 4.1 (1999), There was a slight marginal surplus in 2001, of 1.2 per cent. It was then 3.7 (2002) and 7.2 last year.
SIGNIFICANT OUTCRY
"Now the question that arises is will the Government be able to hold the deficit at the figure targeted for this year. You will remember that there was a significant outcry when it was learnt that the deficit would not be the targeted 6.6 per cent which was an adjustment over the original figure but 8.6 per cent."
Mr. Seaga said that the Government faced added pressure from the international lending agencies which are saying that if the Government cannot reduce the fiscal deficit and return to a surplus, then they will not be programming further lending to the Government. He said this would be disastrous because all of its financing cannot come from domestic sources.
"The Minister of Finance set a target of 5.6 per cent for the year but that hasn't held and that has already risen to 7.7 per cent," the Opposition leader said. "What does that mean in monetary terms? It means this target of 5.6 per cent which represents some $25 billion is now $30 billion and we need to ask where is the money coming from?
MEETING WITH THE IMF
"We had a meeting with the IMF late last year and they told us that the fiscal deficit is likely to be 8.3 per cent which in monetary terms is $36 billion, which spells an overrun of $11 billion on the original target.
"So with the original 5.6 per cent moving to 7.7 per cent on the Ministry of Finance's November accounts, and now moving to 10 per cent based on the Minister's own words, as against 8.3 by the IMF, we are left in a quandary as to what is the real fiscal deficit for this year. What we do know is that the target of $25 billion has been busted."
Mr. Seaga declared that the Minister of Finance and Plan-ning was duty-bound to tell the nation what the real fiscal deficit figure is likely to be for fiscal year 2003/2004 because it will tell the country what sort of overhang the country is likely to have going into the 2004/2005 budget.
MAGNITUDE OF PROBLEMS
This would give an indication of the magnitude of the problems likely to be faced with the next budget. He said the extent of the difficulties faced by the economy has not been evaluated in quantitative terms.
Mr. Seaga placed the fiscal deficit level at about 10 per cent of GDP.
"We need these figures because businesses have to plan accordingly, the higher the deficit, the more funds that have to be found to cover it. More revenue has to be found and revenue comes only from increased taxes or the reduction of expenses."
