Plugging the hole - $6b gap in Budget to be filled with more

[Lazie]

Gary Spaulding, Senior Gleaner Writer

The Government yesterday signalled that it would be going to the market to plug the $6-billion gap in the Budget.
"There is going to have be some increase in borrowing," Finance Minister Audley Shaw told journalists at yesterday's post-Cabinet press briefing.
"$24-25 billion will have to be raised," he added.
The finance minister said he did not have a choice but to resort to the market.

But the finance minister sought to downplay the effects of going back to the market.
He suggested that the increased borrowing would be mitigated by the International Monetary Fund (IMF) programme being pursued by the Government.

"This is an important aspect of the IMF agreement, so we can access resources from other multilateral institutions," Shaw said.
He revealed that the bulk of new loans would be accessed through the external market, while a small portion would be sought through the domestic market.

Empty promises
Shaw conceded that the Government had failed to realise its projected $16.8-billion Budget cut, saying it was only able to reduce its expenditure by just over $10 billion.
Financial analysts have reacted with surprise that the Government planned to spend $561.4 billion instead of the projected $555 billion, after repeatedly promising to slash the expenditure budget.
The revised figures were released in the first Supplementary Estimates, tabled in the House of Representatives on Tuesday.

But Shaw told journalists yesterday that the Government had no option because of the severe revenue shortfalls in a range of areas.
Shaw said a reduction in revenues had triggered a two percentage points increase in the fiscal deficit, moving it from 6.6 to 8.6 per cent.
He said following this week's trip by a local team to Washington, an IMF contingent is scheduled to arrive in Jamaica in the middle of October.
"They will be coming to Jamaica to dot the i's and cross the t's, after which the Government will put together the letter of intent," Shaw asserted.

However, the finance minister also warned that the IMF engagements in Turkey next week could upset the timetable for the fund's approval of Government's request for a US$1.2-billion standby facility.
"Out of an abundance of caution, I must say that the IMF may well consider the application in November."

That issue Shaw said might not be too troublesome, bearing in mind the Government may not need the standby agreement, or may only need a portion. "Having an IMF agreement gives us resources for balance of payment and opens the door to funding of between $400 and $500 million at interest rates of between 1.5 and 4.5 per cent from other multilateral institutions."
gary.spaulding@gleanerjm.com

http://www.jamaica-gleaner.com/glean...ead/lead1.html

[Lazie]

This makes no sense. This is the ideal time to address the oversized public sector. The wage bill is too big and it appears this gov't is afraid to take the necessary measures.

[Lazie]

Increased Interest Costs and Public Sector Wages Spur Budget Increase


Minister of Finance and the Public Service, Hon. Audley Shaw, has cited increased interest costs and public sector wages, as the main reasons for the approximately $6.3 billion increase in the First Supplementary Estimates, which were tabled in the House of Representatives yesterday (Sept. 22).
The increase brings the 2009/10 Budget to $561.3 billion, up from $555 billion.
Minister Shaw, who was speaking at the weekly post-Cabinet press briefing at Jamaica House today (Sept. 23), explained that the Government has had "to accommodate an additional $16 billion in interest costs, as well as close to $1 billion additionally, in terms of public sector wages."
The increase was balanced by cuts of about $6 billion from the Capital side. "The difference between what we have had to cut and what we have increased, the amount is roughly the same $6 billion," the Minister noted.
According to the new figures, the Capital Budget was reduced by just under $6 billion, however, the Recurrent Budget increased by just over $12 billion, leading to the over $6 billion increase.
In all, $27.1 billion was added to the 2009/10 Estimates by the Government, with $25 billion going to the Recurrent Budget and $2.1 billion to the Capital Budget. However, cuts and transferrals added up to $20.8 billion, resulting in a net increase of only $6.3 billion.
The estimates will be debated next Tuesday (Sept. 29) in the House of Representatives, after the figures are reviewed by the Standing Finance Committee of the House, which comprises all 60 Members of Parliament (MPs).
Turning to other matters, Mr. Shaw pointed to increased challenges faced by the Government, due to the current global economic downturn, which has contributed to a shortfall in anticipated proceeds from divestment and a reduction in revenue.
"The simple reason for that is that the time in which we are operating in is not the best time for divestment. Certain resources, we had looked at, for instance, the divestment of the Jamaica Public Service Company Limited (JPSCo), our 20 per cent shares in that, was part of an ambitious programme of about a $12 billion divestment proceeds that we had anticipated," the Minister explained.
He noted that due to the global conditions, divesting at this time would result in "virtually...giving away your asset. So it's a decision that we've had to make, so that when you combine the reduction in revenue, which is projected at about $13 billion, and the shortfall in the projected proceeds from divestment, mitigated somewhat by some $2.6 billion in grants that we received from the European Union (EU), we see that we have a challenge there that we will have to deal with."
He noted that, within this context, it is even more important that Jamaica proceeds to finalise an agreement with the International Monetary Fund (IMF), partly due to the fact that revenue streams, in terms of foreign exchange earnings and foreign exchange revenue, are "off."
"Between earnings in foreign exchange and earnings of foreign exchange in revenue, we are significantly off: remittances are down, the bauxite income is down. So out of an abundance of caution, we made the decision that we would submit an application for a standby agreement with the IMF, so that we would have access to up to US$1.2 billion, should it become necessary for the country," Mr. Shaw explained.

http://www.jis.gov.jm/finance_planni...T_INCREASE.asp

[Plush]

I am convinced that this government has no idea what they are doing. None at all. The complain that the counrty is heavily burdened with debt but there solution too fixing problems is to borrow more. There is alot of waste in government spending and this is not being addressed. How much did they cut salaries in the public sector? There is areas where they can pursue increased revenues..this again, is not being addressed..This government has it's eye on the next election and is afraid to address critical issues.

[Lazie]

I am convinced that this government has no idea what they are doing. None at all. The complain that the counrty is heavily burdened with debt but there solution too fixing problems is to borrow more. There is alot of waste in government spending and this is not being addressed. How much did they cut salaries in the public sector? There is areas where they can pursue increased revenues..this again, is not being addressed..This government has it's eye on the next election and is afraid to address critical issues.

Hey .. there are those who were convinced that the earth was flat and there are those who are still convinced the Moses parted the Red Sea. So if you want to be convinced of that .. so be it.

You ask about salary cuts? You obviously haven't been paying attention have you? The gov't say no increase nurses have been calling sick since yesterday? Teachers were planning to disrupt the start of the school year etc. Yet you a ask bout salary cut?

Since they have no idea, "none at all" according to you, can you imagine the position we'd be in if they hadn't stood their ground under pressure from all the doubters bout the increases?

[Plush]

oh ok, so are you saying that it's ok for the government to yield to whatever people want..clearly you have no clue either. This is why there will forever be protests' and sickouts, and every other game the people will play..why, the government will yield because they are scared. It is time for a strong leader to make tough decisions that are not favourable. You can be like the Observer and defend the incompetent government all you want.
Bottomline, you don't yield to the people and run the country in the ground just so you can win another election.

[Me]

Cuts aside, the government will always have to borrow more in the near term if they want to satisfy even the basic needs of the various ministries.

Some of the outstanding debt needs to be restructured

[Lazie]

oh ok, so are you saying that it's ok for the government to yield to whatever people want..clearly you have no clue either. This is why there will forever be protests' and sickouts, and every other game the people will play..why, the government will yield because they are scared. It is time for a strong leader to make tough decisions that are not favourable. You can be like the Observer and defend the incompetent government all you want.
Bottomline, you don't yield to the people and run the country in the ground just so you can win another election.

"clearly you have no clue either" Fully aware a that. Thats why we try fi keep abreast instead of talking bout cow jumping over the moon. The gov't has been accused of being uncaring, hard hearted and not listening to the people etc because of their position on the salary increases.


As pointed out at the pc yesterday, the reason for the increase is due to interest and of course salaries. They made cuts in various ministries, unuh complain yet you claim the gov't a run the country in the ground? I guess like me you have no clue.

[Plush]

Big man, it seems you live in a box lack of windows or a peep hol. You have no idea of what's going on around you? I ask again, where are the cuts? Around the world, governments are implementing salary freezes and laying off people...In Jamaica, we are discussing salary increases..Only in Jamaica

[Plush]

The government doesn't need to borrow more. They need to refinance loans at lower interest to reduce debt servicing and cut other expenses or at worse keep them flat...this is what a sensible government would be pursuing and that's not rocket science. Jamaica was in a worst psoition than most of the world entering the recession and this requires them to take even more drastic measures to keep pace. Especially given that two of the biggest industries, Tourism and bauxite, will take a beating throughout these challenging times

[Lazie]

Big man, it seems you live in a box lack of windows or a peep hol. You have no idea of what's going on around you? I ask again, where are the cuts? Around the world, governments are implementing salary freezes and laying off people...In Jamaica, we are discussing salary increases..Only in Jamaica

... wait ... as you've proven once again you haven't been paying attention. The gov't has said no salary increases. They've cut their salary while Her Majesty's "loyal" Opposition said hell no. Nurses, teachers, police all up in arms that dem want dem money. Yuh right, only in Jamaica, but yuh not keeping it real. When Bruce said no increases he was mocked, even by hypocrites on this very forum, yet when Obama did it as he took office it was as if he turned water into wine.

"I ask again, where are the cuts?" Wait, I was of the impression you knew what you were talking about?

[Assasin]

that a nuh the government fault. I said I have to laugh when people talking about increase in a time like now but you have to understand the people of Jamaica don't get it.

[Lazie]

that a nuh the government fault. I said I have to laugh when people talking about increase in a time like now but you have to understand the people of Jamaica don't get it.

Its one of 2 things. Plush isn't paying attention or him just choose to come and grandstand this morning.

[Me]

The government doesn't need to borrow more. They need to refinance loans at lower interest to reduce debt servicing and cut other expenses or at worse keep them flat...this is what a sensible government would be pursuing and that's not rocket science. Jamaica was in a worst psoition than most of the world entering the recession and this requires them to take even more drastic measures to keep pace. Especially given that two of the biggest industries, Tourism and bauxite, will take a beating throughout these challenging times

Even if the govt cuts and restructures, they will still have to borrow more in the short term.

[Assasin]

what Bruce Golding say he is going to do next year is ask for volintary and early retirement. This is a much more structured way that is used in states like NY.

If he doesn't get enough then he will have to cut. In order to get no increase he had to make a deal with the mobster unions that there will be no layoff for this year. Can you imagine what disruption there would have been if he said no raises and cut public service by 20%?