Gov't to spend less in 2010-11
Daraine Luton, Senior Staff Reporter
With one week to go before the tabling of the estimates of expenditure for the 2010-2011 fiscal year, Finance Minister Audley Shaw has indicated that the national budget will be at least $100 billion less than the previous year.
Shaw told the Standing Finance Committee of Parliament yesterday that the reduction in the Budget is due to the lowering of interest rates, as well as the extension of the maturity on some Government of Jamaica instruments under the Jamaica Debt Exchange programme.
"This year we have high levels of interest, which is $186 billion. It will come down to about $130 billion in the next fiscal year. The amortisation which is in the same region - $180 billion - will be down to around $100 billion," Shaw said.
The cut in expenditure, if it materialises, would bring Government's expenditure for the year to just under $500 billion. Government is spending $593 billion this year on the country's affairs.
Shaw had originally budgeted to spend $555 billion this fiscal year. However, after two supplementary budgets, the last of which was tabled on Tuesday, government expenditure soared to just under $600 billion.
Yesterday, Shaw promised that the new Budget would be credible. He has also signalled that it will contain little fat, as Government aims to cut its expenditure to meet International Monetary Fund (IMF) stipulations.
"There will have to be adjustments in terms of expenditure. There is $13 billion in arrears from various agreements with the public sector and we will not be able to pay that $13 billion this year. This is part of the contraction that is going to have to come about," Shaw said.
"There are also areas of capital expenditure that will have to be truncated in order for us to stay on course and fulfil the IMF targets. It is not an easy exercise. There are sacrifices that we will have to continue to make for some time," he added.
10 to 11 per cent deficit
Meanwhile, the finance minister, who was responding to questions from Central Kingston Member of Parliament Ronald Thwaites, said the fiscal deficit this financial year will be between 10 and 11 per cent.
Financial Secretary Wesley Hughes had advised Shaw just before he responded that the fiscal deficit will come out at 11.3 per cent.
At the start of this fiscal year, Shaw announced that the Government was targeting a deficit of 5.5 per cent of the country's gross domestic product (GDP), or about $65.4 billion. The deficit target was later revised to 8.7 per cent of GDP, or $94.5 billion for the year.
Shaw said a big part of the increase in the deficit was an increase related to the debt exchange.