By Lynford Simpson, Staff ReporterFINANCE AND Planning Minister, Dr. Omar Davies, yesterday admitted that the Government was "going about it the wrong way" in reducing the country's debt burden.
He made the comment during a sitting of the Standing Finance Committee of Parliament to review the Supplementary Estimates he had tabled in the House a week earlier. He was responding to a question from Audley Shaw, JLP Spokesman on Finance.
"No, we won't be (achieving those targets)," Dr. Davies said, when asked whether the target of reducing the debt as a percentage of GDP was being met. "We are going in the wrong direction," he conceded, when pressed about the Government's debt reduction strategy.
This, he said, "should be obvious in terms of the adjustments which we have spoken about in regard to salary, with regard to interest, and with regard to the need for unprogrammed expenditure in response to the four major floods we have had."
Dr. Davies was referring to recent salary increases to public servants, including parliamentarians. In the case of parliamentarians, a 103 per cent hike in their salaries has pushed the Budget up $192 million. Some $300 million has been set aside to compensate the nearly 800 prison warders who were interdicted on quarter pay nearly three years ago. And interest payments on debt continue to eat away the major chunk of the Budget.
Four devastating floods since last year have wreaked havoc on the physical infrastructure while damaging the agriculture sector severely. The damage has been put at more than $1 billion.
Dr. Davies said some of the flood damage was being fixed under the Deferred Financing Programme, and through the Inter-American Development Bank (IDB), by way of loans. Those funds would eventually be brought on to the Budget.
The Finance Minister had earlier explained that the First Supplementary Estimates for the fiscal year provided for gross incremental expenditure of $23.6 billion. Of this amount, $22.8 billion relates to recurrent expenditure and $790 million to additional capital expenditure.
He noted that the gross total of $23.6 billion was offset by a reduction of $10.1 billion, resulting in a net increase of $13.46 billion to the Budget. Expenditure moves from $210 billion as tabled in April, to $223.5 billion.
A breakdown of the figures shows recurrent expenditure moving from $125 billion to $140 billion while capital expenditure is cut from $9.9 billion to $8 billion. Amortisation remains at $75 billion.
