By Robert Hart, Staff ReporterOPPOSITION LEADER Edward Seaga yesterday predicted that the worsening fiscal deficit will force Government to turn to the local market to raise the equivalent of US$200 million to close the budget gap.
"Things have not gone the way the Minister (Dr. Omar Davies) proposed," said Mr. Seaga, speaking at the Lions Club of Kingston's 39th anniversary luncheon held at the Jamaica Pegasus Hotel, New Kingston.
"At this present time the deficit is not $25 billion anymore but is at the level which the IMF projected in a meeting with me and my team in December, of 8.3 per cent or $36 billion."
The figures, he said, indicate that the Government has failed to contain the deficit.
The Government had set a deficit target of 5.6 per cent for this fiscal year, but last indicated that it was at 7.7 per cent, before publication of the December data, its latest to date.
The Opposition Leader was adamant that Government would "have to go to the local market to raise another extremely substantial amount of funding in order to close that gap," he said, "which means that the 45 per cent of all the deposits that are going into Government borrowings will now be a much larger sum."
MORE PRESSURE ON INTEREST RATES
He could not say exactly how much more of the pool of funds Government would be demanding, but warned that "Whatever it is, it's going to put more pressure on interest rates because it will be leaving still less for the private sector to borrow."
Mr. Seaga said the Patterson administration has had no success in containing the fiscal deficit since 1996, with the exception of one year adding that any success the Government had before then was the result of external prescriptions.
"The IMF was there laying down the guidelines, monitoring and instituting a certain amount of discipline in the process," he said.
"The very first year after they ceased having an IMF looking over their shoulders, setting targets and ensuring that the targets were met the very first year which is 1996 they went back into deficit and have been in deficit ever since except for one year."
The Opposition Leader also cast doubt on any positive outcome from the negotiations between the Finance Minister and trade unions to reduce public sector wage spending.
Indications are that the parties are discussing a public sector wage freeze in substitution for job cuts, as a means of containing costs.
