Thu | Jul 19, 2018

Shaw's shocker

Published:Wednesday | August 31, 2011 | 12:00 AM
Finance Minister Audley Shaw. - File

  • Finance minister hikes Budget by $2b despite prepping nation for sharp cut

Arthur Hall and Erica Virtue, Senior Gleaner Writers

Finance Minister Audley Shaw has tacked on $2 billion to the Government's Budget for this fiscal year, confounding commentators who had projected cuts of between $5 billion and $7 billion in the Golding administration's spending plan.

In the First Supplementary Estimates tabled in Parliament yesterday, Shaw disclosed that the Government now plans to spend $546.8 billion for the fiscal year, up from the $544.7 he had indicated in April.

The increase moves the Budget up by less than half a percentage point and is below the rate of inflation, which was two per cent for the first quarter of the fiscal year.
Yesterday, Shaw said he did not want to comment on the proposed increase to the Budget.

"When the debate starts, I will speak to it," he told The Gleaner.

The unexpected increase in the Budget came less than one month after Shaw had told the country that the Supplementary Estimates would reflect deep cuts so that the primary balance target could be achieved.

"These adjustments involve cuts to capital and recurrent expenditure across ministries, departments and agencies," Shaw said in an August 7 address to the nation.

"This is because a sacrosanct part of our (IMF) agreement is the containment of expenditure within the limits of the resources available. This is the only honest approach we can take towards achieving a solid future.

"It is folly to believe otherwise, and we must continue to appeal for the understanding of the Jamaican people when things that they would like to see done cannot be done at this time because the resources are simply not available," said Shaw at the time.

But in the Estimates tabled yesterday, Shaw added $4.4 billion to the recurrent budget, reflecting the payment of a seven per cent wage increase to public servants.

The capital budget was cut by $2.3 billion as Shaw made fiscal space leaving the net increase at a shade more than $2 billion.

As expected, most government ministries, agencies and departments were given more money for housekeeping to pay the wage increase.

However, the allocations for mileage, telephony, stationery and office supplies, training expenses, travel expenses, fixtures and fittings and computer hardware were reduced for most entities.

The capital side of the Budget reflected cuts in some ministries.

Among those affected were the Ministry of Energy and Mining, which lost $860 million allocated to the Petrojam refinery update and $50 million of the $450 million which had been allocated to the Rural Electrification Project.

The Ministry of Education lost $800 million from its capital budget, with delay in the construction of two high schools and one primary school, a School of Hospitality and Tourism Management and joint National Youth Service/Youth Information Centre offices.

The Estimates also reflect an almost $3 billion reduction in interest payments.

Interest payments on domestic debt is now estimated at $86.3 billion for the fiscal year down from $88.6 billion, while a lower-than-projected exchange rate should shave $683 million off the interest payments for external debt.

For his part, Opposition spokesman on Finance and the Public Service, Dr Peter Phillips, said the Government has shifted expenses around.

"On a cursory glance, what has been done is the reordering of expenditures. Some expenditures have been increased and some re-ordered," Phillips said. "Now what you have is that there are some interest-charge savings and so, but there has been about $11 billion of projected expenditures cut and some others have been increased."

He said the estimates would be given much scrutiny.

"And that is what the Public Administration and Appropriations Committee (PAAC) is going to have to look at, both Standing Finance and before that PAAC," Phillips said.