The Jamaica Labour Party will take over the management of fiscal accounts that have remained well within target, at least for the first four months of the fiscal year.

The Finance Ministry, under Dr. Omar Davies, has just reported a lower-than-projected deficit of $16.6 billion, or $3.2 billion better than budgeted, due to continued restraint on spending, but moreso from bigger than expected tax and fee collections.

The treasury took in taxes that were $1 billion above expectations, boosting total revenues and grants to $76.5 billion to the end of July.

Corporate and income tax collections were almost $1.6 billion stronger than expected, but lower than projected intake from Special Consumption Tax on both consumption goods and imports eroded some of the gains.

Overspending a problem

Overall spending topped $93 billion, but this figure was more than $600 million below Davies' budget for the period.

The outgoing Finance Minister paid out $260 million less than budgeted for wages, and also held the brakes on debt servicing in the domestic market, but the gains were offset by overspending on recurrent programmes and external debt servicing.

But it was only by cutting expenditure on capital projects by $912 million that Davies managed to keep below his overall spending target.

The Finance Minister, whose monthly borrowings are used to fill gaps in his budget, was restrained in his market forays, at least on the international capital market.

At the end of July, perhaps constrained by the United States subprime mortgage debacle that has kept investors shy of subscribing to new debt, Davies had borrowed only $1.8 billion from external sources, though he had signalled intentions to issue bonds totalling more than $12 billion over the period.

Instead, the Finance Minister has tapped the local markets for the funds, borrowing just under $48 billion domestically between April and July, against a target of $37.7 billion.

Over the same period, the ministry paid down $26 billion of the country's principal debt.

At the end of July, the debt stock was up to $969.4 billion, a five per cent growth since the end of fiscal 2006/07.

The primary balance, which measures the extent to which expenditures are covered by revenues, when debt servicing charges are ignored, was better than expected at $18 billion (the budget target was $15 billion), but is more than $2 billion below its July 2006 level.

lavern.clarke@gleanerjm.com

TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, SEPTEMBER 8, 2007