By Andrew Green, Staff ReporterTHE $329.8 billion spending proposal put to Parliament on Wednesday by Minister of Finance and Planning, Dr. Omar Davies, is causing some concern about how it is to be financed.
Heavily dominated by debt financing, the budget for the new financial year, which started this week, represents a 17.5 per cent increase over the spending in the last financial year. The $329.8 figure includes $1.7 billion in foreign assistance the Government receives.
This expenditure budget "is not unexpected," said Winston Dear, president of the Montego Bay Chamber of Commerce. "We just want to know how they are going to finance it." An increase in the budget of this magnitude creates concerns about its funding, said Danny Roberts, vice-president of the Jamaica Confederation of Trade Unions. He said the trade unions are worried that workers will be hit by cuts in social welfare spending, while at the same time, taxes may be increased.
FINANCE COMMITTEE
The Standing Finance Committee of the House of Representatives will start reviewing the spending proposal next week, and Dr. Davies will outline his proposal for financing the budget in a presentation on April 15.
Along with Mr. Dear, economist Errol Gregory said he was not surprised by the expenditure budget proposal. "This really shows the primacy of the debt problem," Mr. Gregory said. Seventy cents of every dollar budgeted, is allocated for debt payment.
"How we will use the other 30 cents requires a really delicate balancing act," Mr. Gregory said. There are severe limits on how the Government will be able to handle its social agenda.
There is a "paltry" capital budget this year, Mr. Gregory said. This is a cause for concern as the capital budget fuels development, necessary for the economy to grow.
The announced private sector investments will increase the country's productive capacity, Mr. Gregory said. But the small capital budget will tend to undermine growth.
"This shows the country is in a holding position," Mr. Gregory said. Overall, Mr. Dear said his organisation accepted the spending proposal.
"Security and education are key areas and those are highlighted," Mr. Dear said. "The Opposition is making an argument about the increase in education being inadequate, but it is not much less than they agreed."
The budget for the Finance Ministry is increased, and that is expected, Mr. Dear said. "We are quite satisfied with the budget," Mr. Dear said.
For the unions, the concern is about a "double whammy," of hiked taxes and cut social spending, Mr. Roberts said.
The Government had been negotiating wage restraint agreements with various categories of state employees, Mr. Gregory said. But this budget could have added negative implications for the society.
"We have to balance the social agenda with investments," Mr. Gregory said. "That is my concern."
