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Finance Minister Audley Shaw made his maiden budget presentation in Parliament last Thursday and it was brilliant, spirited and simple. It was the first made by the Jamaica Labour Party government in 20 years. Perhaps the most challenging aspect of the presentation was the essential need for economic growth as measured by the Gross Domestic Product. According to the Statistical Institute of Jamaica, the GDP is the total value of the goods and services produced by a country or region during a given period, and is the single, most widely used indicator of economic performance.
SHAW... The macroeconomic programme for 2008-2009 is aimed at creating the condition that can support sustainable growth into the medium term
It is because economic growth is so important to the development of the country and the welfare of its people that I think Shaw should have spent more time on it. I hope he will carry the message of the importance of growth, government's policy to create more growth and the responsibility of workers and management to increase production and productivity across the country. He did say at his post-budget presentation news conference on Friday that Prime Minister Bruce Golding would outline the policy to create growth through increased investment when he speaks in the budget debate on Thursday. However, Shaw should realise that it is his responsibility to roll the ball of growth.
The finance minister said economic growth is projected to accelerate to three per cent in the fiscal year, 2008/2009, a rate that is significantly above the average of 1.2 per cent over the past 10 years, 3.5 per cent in 2009-2010 and 2010-2011. He said the projected acceleration of growth reflects capacity expansion, financed mainly by local and foreign direct investment. The forecast also assumes recovery in the sectors that were affected by adverse weather and other exogenous factors in 2007. Growth in the current fiscal year will be driven mainly to gross fixed capital formation in tourism, manufacturing, agriculture and mining sectors as well as growth in consumption, he said. It is perhaps necessary to emphasise that in real terms that the prosperity of the country and the welfare of its people can only be achieved by economic growth through increased production in goods and services. As Derrick Lattibeaudiere told me at Shaw's post-budget presentation news conference, the more the economy grows the bigger the share of the cake for the people.
Shaw has much reason to be elated that the fiscal deficit has been cut from a projected 5.5 per cent from 2007-2008 to 4.7 per cent of the GDP. He said that government had done in seven months what had not been achieved in seven years. Government had to cut expenditure and take tough decisions. I think the government should be given some credit for the reduction in expenditure without causing major hiccups. The fiscal deficit is projected to be further reduced to 4.5 per cent in the 2008-2009 fiscal year.
However, it is still too high and we must bring it to three per cent in the next fiscal year - the safety level, according to international standards, and later to balance the budget and create a small surplus for capital development. "The macroeconomic programme for 2008-2009 is aimed at creating the condition that can support sustainable growth into the medium term," Shaw said. The main features of the programme are restoration of growth in agriculture, implementation of additional capacity in the manufacturing and export sectors, improvement of fiscal performance and debt indicators, monetary conservatism to minimise inflation risks and the maintenance of adequate reserves to support investor confidence.
Public debt continues to be a millstone around the country. According to a statement on debt management strategy presented by Shaw at the end of March 2008, public debt stood at more than one trillion dollars, an increase of 8.4 per cent over the stock of $923.1 billion recorded at the end of March 2007. What is frightening is that the debt-to-GDP ratio stood at 126.1 per cent at the end of 2007-2008 compared with the 132.4 per cent at the end of 2006-2007 and 134.8 per cent at the end of 2005-2006. In the current fiscal year, 2008-2009, the government hopes to reduce the debt to GDP ratio to below the 100 per cent mark. The government is still borrowing. The simple fact is that the country is living well above what it earns from the production of goods and services. This has to be adjusted somehow.
The finance minister outlined five pillows which will be given priority by the government to rebuild the foundation for a vibrant and competitive economy and which the budget will seek to advance. The pillows are the need to: apply a strong, disciplined approach to fiscal and debt management, reform the tax system so as to improve efficiency and to create a business-friendly environment, reduce bureaucracy, corruption, waste and impediments to investment, aggressively drive local and foreign direct investment above the levels achieved over the last five to 10 years, aggressively move on the issue of energy conservation and the development of alternative energy to make Jamaica the alternative energy centre of the Caribbean.
Mr Shaw said that while the dominant emphasis will be placed on collection of arrears, revenue protection and widening the tax net, because of the extraordinary expense associated with the tidying up of the budgetary process, it was found necessary to improve a limited tax package of $2.9 billion.
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SHAW... The macroeconomic programme for 2008-2009 is aimed at creating the condition that can support sustainable growth into the medium term It is because economic growth is so important to the development of the country and the welfare of its people that I think Shaw should have spent more time on it. I hope he will carry the message of the importance of growth, government's policy to create more growth and the responsibility of workers and management to increase production and productivity across the country. He did say at his post-budget presentation news conference on Friday that Prime Minister Bruce Golding would outline the policy to create growth through increased investment when he speaks in the budget debate on Thursday. However, Shaw should realise that it is his responsibility to roll the ball of growth.
The finance minister said economic growth is projected to accelerate to three per cent in the fiscal year, 2008/2009, a rate that is significantly above the average of 1.2 per cent over the past 10 years, 3.5 per cent in 2009-2010 and 2010-2011. He said the projected acceleration of growth reflects capacity expansion, financed mainly by local and foreign direct investment. The forecast also assumes recovery in the sectors that were affected by adverse weather and other exogenous factors in 2007. Growth in the current fiscal year will be driven mainly to gross fixed capital formation in tourism, manufacturing, agriculture and mining sectors as well as growth in consumption, he said. It is perhaps necessary to emphasise that in real terms that the prosperity of the country and the welfare of its people can only be achieved by economic growth through increased production in goods and services. As Derrick Lattibeaudiere told me at Shaw's post-budget presentation news conference, the more the economy grows the bigger the share of the cake for the people.
Shaw has much reason to be elated that the fiscal deficit has been cut from a projected 5.5 per cent from 2007-2008 to 4.7 per cent of the GDP. He said that government had done in seven months what had not been achieved in seven years. Government had to cut expenditure and take tough decisions. I think the government should be given some credit for the reduction in expenditure without causing major hiccups. The fiscal deficit is projected to be further reduced to 4.5 per cent in the 2008-2009 fiscal year.
However, it is still too high and we must bring it to three per cent in the next fiscal year - the safety level, according to international standards, and later to balance the budget and create a small surplus for capital development. "The macroeconomic programme for 2008-2009 is aimed at creating the condition that can support sustainable growth into the medium term," Shaw said. The main features of the programme are restoration of growth in agriculture, implementation of additional capacity in the manufacturing and export sectors, improvement of fiscal performance and debt indicators, monetary conservatism to minimise inflation risks and the maintenance of adequate reserves to support investor confidence.
Public debt continues to be a millstone around the country. According to a statement on debt management strategy presented by Shaw at the end of March 2008, public debt stood at more than one trillion dollars, an increase of 8.4 per cent over the stock of $923.1 billion recorded at the end of March 2007. What is frightening is that the debt-to-GDP ratio stood at 126.1 per cent at the end of 2007-2008 compared with the 132.4 per cent at the end of 2006-2007 and 134.8 per cent at the end of 2005-2006. In the current fiscal year, 2008-2009, the government hopes to reduce the debt to GDP ratio to below the 100 per cent mark. The government is still borrowing. The simple fact is that the country is living well above what it earns from the production of goods and services. This has to be adjusted somehow.
The finance minister outlined five pillows which will be given priority by the government to rebuild the foundation for a vibrant and competitive economy and which the budget will seek to advance. The pillows are the need to: apply a strong, disciplined approach to fiscal and debt management, reform the tax system so as to improve efficiency and to create a business-friendly environment, reduce bureaucracy, corruption, waste and impediments to investment, aggressively drive local and foreign direct investment above the levels achieved over the last five to 10 years, aggressively move on the issue of energy conservation and the development of alternative energy to make Jamaica the alternative energy centre of the Caribbean.
Mr Shaw said that while the dominant emphasis will be placed on collection of arrears, revenue protection and widening the tax net, because of the extraordinary expense associated with the tidying up of the budgetary process, it was found necessary to improve a limited tax package of $2.9 billion.
http://www.jamaicaobserver.com/colum...ION__BUT__.asp
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