Change is good

[Assasin]

Jamaica's debt hits $1 trillion - UK writes off £5 million
published: Wednesday | April 16, 2008


Finance Minister Audley Shaw now has a record debt stock to service. - File

The United Kingdom (UK) is writing off £5 million (J$703 million) of Jamaica's debt, saying it is freeing the funds to be pumped into services and poverty programmes.

Jamaica owes the UK more than $1.6 billion, which the write-off would cut by approximately 43 per cent.

"High levels of debt are a significant drag on economic growth and on the ability of any government to adequately address social needs," said UK Minister for International Development Shahid Malik in a DFID-issued release.

"Rather than money leaving Jamaica, it can now go towards key services like education, water and sanitation, security and justice, that will improve the well-being of Jamaican citizens."

External creditors
At the end of March, Jamaica's overall debt stock hit the $1 trillion mark for the first time, up 8.4 per cent year on year.

But the finance ministry is reporting that on the plus side, the debt to GDP ratio, a key indicator of the debt's performance, has fallen six points to 126.1 per cent, down from 132.4 per cent.

Jamaica owes $438.6 billion to external creditors and, outside of the multilaterals who, combined, are owed $85 billion, is most heavily indebted to the United States and Japan.

Total bilateral debt, that is, money largely owed to country governments and their agencies, is now $49 billion.

Another $280.55 billion is held by bondholders, which, together with the funds owed to other commercial creditors, places more than 69 per cent of the external debt in private hands.

The UK write-off was announced as a signal of confidence in the Golding administration.

"The Jamaican Government led by Bruce Golding has made commitments to bring about faster progress in economic management, good government and poverty reduction and we want to seize this opportunity to align our support behind these positive steps," said Malik.

Within the past decade, under the Commonwealth Debt Initiative launched in 1997, the UK has written off £51 million of Jamaican debt, said DFID.
It also provides £2.5 million of aid annually.

business@gleanerjm.com

[Karl]

Government's projected revenue increase not credible, says Omar
Balford Henry, Observer writer
balfordh@jamaicaobserver.com
Wednesday, April 16, 2008



Opposition spokesman on finance, Dr Omar Davies said yesterday that the Government's projected revenue increase of $44 billion from increased tax compliance to finance this year's $489 billion budget was not credible.

Dr Davies, who was responding to the minister of finance and the public service, Audley Shaw's opening budget presentation last Thursday at Gordon House, also criticised the Government's expenditure budget for ruling out some basic levels of expenditure.

"We have an expenditure budget which is ruling out certain basic levels of expenditure, which are necessary for the Government to perform. And, on the other side, we have projections of revenue which are inflated," Dr Davies said.

He suggested that taking all factors into consideration, there was an "understated" expenditure budget and an "overstated" revenue budget.
Davies noted that the minister had placed great emphasis on significant increases from improved tax compliance and greater efficiency to finance the budget.

However, he claimed that a 16 per cent increase in Customs receipts in the short term is unlikely; a 21 per cent increase in PAYE (income tax) "makes no sense"; and that neither a growth of 39 per cent in corporate tax collection, nor a 29 per cent growth in GCT collections was credible.
But Davies promised that the Opposition would co-operate with the Government in facing the challenges over the fiscal year.

"The list of difficulties which face the country poses challenges for both you, the Administration, and for us, the Opposition," Dr Davies said. "Our approach is unambiguously clear, in word and in action. Despite the Government's razor-thin margin in seats and in popular vote, we have no intention to be destructive and seek to 'mash down'."

He said that the Opposition had invested too much over the past 18 years to risk "blighting those achievements".

However, Dr Davies said that, in terms of the challenges facing the Administration, there is a question of providing leadership in the face of adverse factors which are out of the Government's control.

"Even whilst we appreciate your difficulties, the job of a government is to provide solutions," he said. "Blaming all ills on the world economy, on mother nature and on the past administration won't take us very far."
Davies also explained that, in terms of the Opposition's co-ordinated approach to the budget debate, it will not be their objective to highlight "every abandoned promise" of the Government.

"However, I should indicate that it is necessary to point to some glaring discrepancies in pursuit of the objectives of laying the foundation for the development of national positions on several fundamental areas of concern," he stated.

He said that the Administration must demonstrate to the country that it has the ability to "lift its game" and provide the leadership which the challenges demand.

The budget debate continues today with contributions from minister of agriculture, Dr Christopher Tufton, and Opposition spokesman on industry and commerce, Peter Bunting.

[Karl]

Shaw skirting the real issues, says Davies
ALICIA DUNKLEY, Observer staff reporter
dunkleya@jamaicaobserver.com
Wednesday, April 16, 2008



Opposition spokesman on finance, Dr Omar Davies, yesterday accused Finance and Planning Minister Audley Shaw of avoiding the real issues and attempting to "trick" Jamaicans in his maiden budget presentation last Thursday.

Davies, in his contribution to the 2008/09 Budget Debate, said the finance minister had skirted the issues of inflation and domestic interest rates and argued that the increases in the minimum wage and the income tax threshold were "a waste of time".

"On the matter of inflation, the minister ran past it," said Davies, who served as finance minister in the previous People's National Party administration. "Let me say without any attempt to score political points that the administration ignores this critical statistic at its own peril, as we are talking about literally life and death for many members of the society."

According to Dr Davies, unless steps are taken to moderate the rate of increase in prices, there would be a "major social challenge in terms of household survival".

In referring to the inflation out-turn for the 2007 calendar year, which was 16.8 per cent, now close to 20 per cent for the 07/08 fiscal year, Davies said the greatest concern was the impact on lower income households which are faced with non-negotiable increases in their utility bills and food prices of over 25 per cent.

"As such, the social stability of the country is being threatened and the budget, as outlined by the minister of finance, does not speak to this issue," Davies contended.

Dr Davies further noted. that it was hoped that "unrealistic assumptions" had not been made based on the projected nine to 10 per cent inflation rate or domestic interest rates in an attempt to fit the deficit target which the Government had projected at 5.5 per cent but last week announced it to be 4.7 per cent and below projection.

"For the good of the nation... we hope that the projected nine to 10 per cent inflation rate holds. If it doesn't, we are in for rough seas on both the economic and social fronts," he added.

Last week, Shaw, in his first budget presentation as minister, said inflation was projected to fall off in the new fiscal year to a range of between nine and 10 per cent. He said this outlook was based on an anticipated deceleration in the rate of increase in international commodity prices, relative stability in the foreign exchange market and a recovery in domestic agriculture.

According to Davies, however, "nothing which has been seen so far this year gives any reason other than 'youthful optimism' for such a view".
Addressing the raising of the income tax threshold to $200,304 as of July 1, 2008 and further to $220,272, as of January 1, 2009, Davies described the first movement in July as "simply a token political act".

"In fact, it is a waste of time and an unnecessary administrative burden for firms and government departments as it translates into an increase of approximately $35 per week in take-home pay for each worker... it's not worth it," he said. "A far better and respectful solution would have been to skip this first round and make the adjustment of January 2009 more meaningful."

[Lazie]

Suh now that unuh get a blueprint ... no opinion? Or is it, Omar's words aren't credible?