Lean on me? Prime Minister Portia Simpson Miller and Opposition Leader Bruce Golding are caught in tight quarters as they await the start of yesterday's ceremonial opening of Parliament at Gordon House. - photos by Rudolph Brown/Chief Photographer

Finance Minister Dr. Omar Davies yesterday presented a $380.4 billion budget for the 2007/08 fiscal year, a spending projection that is six per cent higher than the last fiscal year, which ends tomorrow, but a mere two per cent more than a revised estimates approved by the legislature in February.

There was no immediate reaction last night from either the Opposition or the private sector to Davies' spending plan, which, on the face of it, will mean in real terms a reduction in overall outlay, given that inflation for the current fiscal year will run at about 6.6 per cent according to Financial Gleaner projections.

But financial analyst John Jackson suggested that despite the apparent belt-tightening, the administration might still find room for more feel-good capital spending in what will be an election year.

"It seems that there will be a significant increase in the non-debt portion of the budget, by over $30 billion," said Jackson. "That could be the election money."

Recurrent spending

According to the budget document, which will be reviewed by Parliament's Standing Finance Committee over three days next week, recurrent spending is planned at $239.3 billion, up 6.5 per cent on the revised figure of $224.6 billion for the year just ending.

Interest payment on the government's debt will rise by $4.5 billion, to $101.5 billion, or 42.4 per cent of overall recurrent spending.

On the other side of the ledger, amortisations or principal debt repayment will take up about $102 billion, or 72 per cent the $141 billion, or proposed capital expenditure.

This compares with amortisation costs last year of $122.5 billion, when the capital expenditure was $147.5 billion.

In that regard, the government would have had discretionary (non-debt) capital spending during past fiscal year, of $25 billion, which would have included, analysts say, more than $7 billion spent on preparations for the ICC Cricket World Cup.

For this fiscal year, the discretionary (non-debt) capital expenditure is $39 billion.

"Until last year, the average annual capital spending, outside of debt servicing, was around $10 billion," Jackson said. "Even accounting for last year's special expenditure for cricket, there seems to be a big jump. It is now to determine whether there are the projects on which tospend the additional cash and whether the projects can be financed, particularly in a year when the administration is unlikely to bring a tax package."

One area in which the budget suggests there will be significant spending this year is road and bridge maintenance. For instance, $2 billion is allocated for such projects, compared to $907 million in the revised estimates.

Overall, Housing Transport and Works, the ministry responsible for roads, was allocated $17.7 billion, $8.9 billion more than last year.

National Security and Education also got $3 billion more, while the finance ministry's allocation was $11 billion less than last year's $234 billion.