Jamaican Government US$186.69mn budget revision

The Government of Jamaica has tabled a sizable supplemental budget for the second time in the fiscal year which ends in March 2022. 

On 11 January, Finance Minister Nigel Clarke introduced an additional spending bill totalling $25.8bn (US$186.69mn) which takes total expenditure for the fiscal year to $893.05bn (US$5.76bn), up from the $867.3bn (US$5.59bn) previously tabled.  

Clark said the additional allocation was needed in order to meet increases in expenditure items already identified in the previous supplementary budget but would not add to the existing capital budget. 

“Since the tabling of the first supplementary in October, much has transpired within the realm of Government in Jamaica. At the point of the first supplementary, there was no final settlements with any of the public sector bargaining groups,” Clarke said in Parliament, referring to wage negotiations with government workers. 

He argued that while the Government had accounted for these increases in a line item in the first Supplementary Budget, the time had come for those allocations to the respective ministries, departments, and agencies, which requires parliamentary approval. 

Another significant reason for the budget supplement is the depreciation of the Jamaican Dollar on the international foreign exchange market. Some $17.5bn (US$112.88mn) of the $25.8bn (US$186.69mn) will be spent on debt repayment including $12.6bn (US$81.29) on principal repayments. 

The Finance Minister told Parliament that additional sums for debt payment were necessary because “domestic interest rates have increased and the currency had depreciated, resulting in increases in the debt service requirements”. This includes approximately $8bn (US$51.65mn) to pay off a loan guaranteed by the Government of Jamaica on behalf of the National Water Commission (NWC).  

Defending the move, Clarke said that the NWC loan was denominated in US dollars and the repayment would reduce the country’s US dollar loans thereby limiting the impact of the vagaries of currency fluctuation. “It should be noted that this support has contributed to a reduction of the public debt stock,” he noted, adding that it would immediately free up cash flow for the utilities like the NWC. 

During the debate, the Government also referenced an additional $8bn (US$51.65mn) in new spending. Included in that are sums allocated to the Ministry of National Security, the police, National Solid Waste Management Authority (NSWMA), and the Programme for Advancement Through Health and Education (PATH). 

With over 70 murders already recorded in the first 16 days of 2022, the Ministry of National Security will be given an additional $1.4bn (US$9.03mn) on its budget. This includes $197mn (US$1.27mn) for the Jamaica Defence Force coastal surveillance grid power supply, $1.8bn (US$11.62mn) for the purchase of police motor vehicles, stores, and armoury, and $616mn (US$3.97mn) to conduct general police services.  

Other notable new spending includes $310mn (US$2mn) for the NSWMA for public cleansing and garbage disposal and $2bn (US$12.89) to the PATH conditional cash transfer programme. The Ministry of Health was allocated $3.4bn (US$21.92mn), of which the Southern and Western Regional Health Authorities will share $1bn (US$6.45mn). Increases in the allocation for COVID-19 healthcare employers who are working longer hours are included in the health allocation. 

An additional $850mn (US$5.48mn) was also earmarked to be spent on the maintenance of secondary roads across the country. Meanwhile, the Jamaica Urban Transit Company (JUTC), which has been incurring increasing losses during the pandemic will receive an additional $150mn (US$0.97mn) to support its operations as it struggles with to cope with the impact of COVID-19 containment measures. 

On the question of how the additional expenditure will be funded, Minister Clarke told Parliament that the supplementary estimates “will be financed through $11.2bn (US$72.2mn) in additional revenue flows, $5.3bn (US$34.17mn) in additional loan receipts, and utilisation of an additional $9.2bn (US$59.31mn) from prior year cash resources”. 

In September 2021, the Andrew Holness Administration tabled the first Supplementary Estimates of Expenditure. It increased spending by approximately 4% ($36.5bn/US$229.52mn) above the original budget in an effort to address the spread and impact of COVID-19. The First Supplementary Estimates increased the Budget to $867 billion for fiscal year 2021-2022. 

Photo by Sharon McCutcheon