THE GOVERNMENT has pushed back by one year, its target for bringing down the country's debt to the level of national output.
Prime Minister P.J. Patterson told the opening session of a three-day Cabinet retreat at Jamaica House yesterday, that the ratio is now to be reduced to 120 per cent by fiscal year 2006/2007 and to 100 per cent by fiscal year 2007/2008.
The target was based on a Gross Domestic Product (GDP) growth rate of between 2 and 4 per cent per annum. Economic experts had predicted however that it would be a major challenge, in light of the fact that the Government's monetary policy of using high interest rates to defend the currency has been inhibiting the achievement of a 2-4 per cent GDP growth rate over the next 3-4 years.
Jamaica's Debt/GDP ratio of 140 per cent was rated the third highest among sovereigns examined by leading ratings agency Standard & Poors (S&P), late last year.
Mr. Patterson said that to achieve the target not only will there have to be compression in spending but, equally important, significant growth in GDP, through increasing production, productivity, foreign and local investments, according to a release issued by Jamaica House, yesterday.
In its manifesto released just prior to the general election in October last year, the governing People's National Party (PNP) had projected, among its macro-economic targets, a reduction of the Debt to GDP ration to 100 per cent by 2006, "as part of the strategy to manage the national debt and reduce debt servicing costs.
The Cabinet retreat is specifically aimed at putting together the 2002/2003 budget which is to be tabled in April.
In his opening statement to the retreat Prime Minister Patterson said the Government was equipped with the skills and expertise at the policy, technical and administrative levels to deal with and overcome the problems which faced the country at this time.
"We have, as a country, been through even more difficult times before and we will overcome the present ob-stacles," Mr. Patterson said.
The three-day retreat will focus heavily on economic management and policy prescriptions to boost production, employment generation and growth.
He reiterated the Cabinet decision that, notwithstanding the recent slippage in the targets for closing the fiscal deficit, the Government was committed to achieving a balanced budget by financial year 2005/2006.
"This is not just a Ministry of Finance position. It is a Cabinet position and it is non-negotiable," the Prime Minister said.
Closing the gap will involve significant tightening of Government expenditure, widening of the tax net to include persons and entities not now meeting their tax obligations to the country, a realistic examination and modification of the cost of services provided by the State and the elimination of waste in the public sector. An essential plank will be stimulating economic growth and job creation.
On the first day of the retreat, the Cabinet focused on discussions pertaining to the macro economy, debt management, improving revenue and fee collection and the report on the informal economy.
