THE CREDIBILITY of Jamaica's 2004 Fiscal Budget will hinge heavily on how well the Government can maintain stability during the year.
This will mean that, unlike last year, the key targets will have to meet i.e. the inflation rate target; the exchange rate target; the revenue targets' the economic growth targets; and of course, the fiscal deficit target.
Once all of the above can be met, then the goal, for this year, of getting the fiscal deficit down, to between 5-6% of G.D.P., can then be met.
There will be very little room for fiscal manoeuvre, given the onerous debt burden (taking 69 cents out of every dollar in the Budget). While the J$328 billion sum may seem very large, against last year's roughly $280 billion, inflation and debt charges will consume most of these increases, as most other analysts have pointed out.
Many Ministries will have to be run on tight budgets, starting from day one in April, if expenditure is to be controlled. Last year we had much talk about a cost efficiency Committee, to cut government waste, and while "every mickle makes a muckle", there is likely to be only slight savings from this drive.
MEMORANDUM OF UNDERSTANDING
The much talked about Memorandum of Understanding, between the Government and the major labour union, will ease some pressure off the escalated wage bill, but the high debt costs means that the Government will still have to borrow a lot, both in domestic and foreign markets, to meet its obligations. Too high an interest cost on a substantial portion of this borrowing and there goes the budget projections, up in smoke.
We will probably spend a lot of the budget debate arguing about the inability to meet adequate social infrastructure needs (education, health etc.) and, the fact that public sector assets (e.g. fire trucks, police stations, school buildings) continue to be run-down, due to lack of maintenance and preventative maintenance, but the priority for 2004 looks to be about restoring our credit-worthiness.
