Minister of Finance and the Public Service, Dr Nigel Clarke has announced that the 2022/2023 budget has been increased by $60 billion to $972 billion.
The increase of 6.6 per cent is reflected in the First Supplementary Estimates, which the minister tabled in the House of Representatives on Tuesday.
Among other things, he said the Russia/Ukraine war and the supply chain issues and rising inflation that followed were, in part, responsible for the increase. An allocation of $21 billion as part of the compensation package for public sector employees accounts for the bulk of the increased expenditure.
“This arises primarily from the discussions with public sector unions and staff associations in respect of the compensation restructure programmed for implementation during this fiscal year,” Clarke highlighted.
He said an amount of $2.2 billion requested by the Ministry of Health and Wellness to facilitate the payment of salary-related allowances contributed to this increase.
Non-debt recurrent expenditure of $52.7 billion will account for the largest share of the overall increase, while capital expenditure will soak up $1.3 billion and debt service $6 billion.
On the recurrent side, the increased amount is allocated as follows:
-The Ministry of Economic Growth and Job Creation benefits from a net increase of $5.1 billion, of which $4 billion is to support islandwide drain cleaning, de-bushing and minor repairs to gullies; and approximately $3.9 billion for patching, local and general rehabilitation of scoured and damaged roadways islandwide.
-Ministry of Health and Wellness:a net increase of$3.6 billionto support the payment of arrears for goods and services in the Regional Health Authorities (RHAs) and the procurement of drugs and medical supplies in the RHAs.
-Ministry of Transport and Mining: includes approximately $1.1 billion for the Jamaica Urban Transit Company towards the company’s fuel costs and other operating overheads.
-Ministry of National Security group: $6 billionincluding Jamaica Defence Force – $1.5 billion; Police Department – $3.3 billion; and Department of Correctional Services – $862 million.
-Ministry of Education: an allocation of $2.2 billion, including $530 million to supply laptop computers to teachers under the Heads of Agreement with the Jamaica Teachers Association; $592 million towards the production of breakfast/snacks for PATH students; $140 million to support critical repairs in identified schools.
-Ministry of Labour and Social Security: an additional $1.1 billion of the ministry’s increase relates toan 18 per cent increase in the regular cash grants paid to PATH beneficiaries.
Meanwhile, capital expenditure reflects a net increase of $1.3 billion above the approved budget, driven mainly by the additional allocation of $4.1 billion to the South Coast Highway Improvement Programme to facilitate mobilisation of the five remaining work packages and the installation of waterlines.
Clarke told the House that the increase in debt service of $6 billion arises from the impact of increases in interest rates on interest payments. He said interest payments are expected to increase by $10.8 billion, reflecting the result of monetary actions being taken both locally and globally to address the inflationary environment.
“The $10.8 billion increase on interest payments is somewhat countered by a $4.8 billion decrease on amortization payments, which is due primarily to the relative stability of the exchange rate,” he said.
The minister pointed out that theincreased expenditure will be financed primarily through an expected $65.5 billion increase in revenue flows. He noted that the performance of revenues over the first half of the fiscal year has been significantly better than budgeted, reflecting the higher than anticipated recovery of the economy from the impact of COVID-19 as well as the higher than expected inflation.
At the end of September, total revenue flows were $40.4 billion above budget, including $35 billion from tax revenue.
“This performance has been factored into the current forecast, which anticipates total revenue flows of $815.3 billion for financial year 2022/23,” Clarke said.
The revised national budget now has total non-debt recurrent expenditure of $592.2 billion, made up of recurrent programmes of $280.8 billion, compensation of employees totalling $311.4 billion, capital expenditure of $66.4 billion, and debt service of $313.4 billion.