By Dennise Williams, Staff ReporterFOR THE country's next budget, the process of its evolution will be as transparent as possible, said Minister of Finance and Planning, Dr. Omar Davies.
Lessons have been learned from the experience with the last budget when certain taxes were imposed which did not go over well with the public, said Dr. Davies. The upcoming budget, to be opened on April 15, will seek to stimulate economic growth, increase employment and reduce the fiscal deficit and inflation.
The 2004/2005 budget will be 'less spectacular' than that last year, he said. "What is the over-riding contention of this upcoming budget is that we intend to stick to our target of eliminating the fiscal deficit by 2005/2006."
He was speaking at a luncheon put on by the Private Sector Organisation of Jamaica (PSOJ), the Jamaica Bankers Association (JBA) and the Jamaica Exporters' Association (JEA) at the Terra Nova Hotel, St. Andrew, yesterday.
CLAMPING DOWN ON INFLATION
"We intend to make our original deficit targets of three to four per cent of GDP for 2004," he said "We also intend to return inflation to a single digit. It is not negotiable. It is a national priority. It is the only way to get people to control consumption."
The economy is projected to grow by 2.2 to 2.5 per cent, he said. This will come from growth in tourism, construction and bauxite/alumina industries.
"We will be enticing elements of the informal economy to come into the formal economy, namely to get them into the tax net," he said.
To achieve the targets that have been set forth, the Minister said wages must be kept in line, interest payments must be reduced, and the Government will prioritise capital projects in their order of importance to meet budget requirements. The budget process must be as transparent as possible and the Government will also work with the private sector to contain inflation.
"Hopefully there will be a level of buying into the process" by all stakeholders in society, he said. "I would like to publicly salute the maturity of the unions in taking on the Memorandum of Understanding (accepting wage restraint) which will see savings in the next fiscal year of $5-6 billion."
WORKING WITH PRIVATE SECTOR
He said he would be working with the private sector to discuss a comprehensive Memorandum of Understanding. He said that one of the burdens facing the private sector was high interest rates, but rates are falling.
And given that downward trend of interest rates, Minister Davies advised the banking community that, "The margins that commercial banks charge must come down. The private sector is being squeezed."
As a result of the budget last year, he said, "I have learned something about the psychology of betting."
Dr. Davies said concessions made by the Government in the budget of 2003/2004 created a greater fiscal deficit than planned for.
"In the last month of this fiscal year, we were projecting a five to six per cent deficit, but now we expect to see a deficit of 6.9 per cent of gross domestic product (GDP)," he said. "We had to have adjustments to the tax package and we therefore lost resources. Additionally, our expenditure at the end of January was $6.5 billion greater than projected with interest payments $10 billion above budget."
