Date: December 02, 2019

For the period of April to October 2019, the GOJ reported Total Revenues & Grants of $358.76 billion, $4.39 billion more than the Government’s projection. Furthermore, year over year, this represents an increase of approximately 6.1% relative to the $338.28 billion recorded for the corresponding period in 2018. ‘Tax Revenue’, ‘Non-Tax Revenue’ and ‘Capital Revenues’ outperformed projections during the review period. While, ‘Grants’ underperformed projections during the period. ‘Tax Revenue’ amounted to $317.58 billion, $2.70 billion more than budgeted while ‘Non-Tax Revenue’ of $37.14 billion was reported; $1.72 billion more than budgeted. Whereas, ‘Capital Revenues’ totalled $826.3 million, $13 million or 1.6% more than budgeted. ‘Grants’ underperformed the budget by $51 million, amounting to $3.21 billion during the review period.  Notably, no provisional amount was booked for ‘Bauxite Levy’ for the review period.

Expenditures

Total Expenditure for the period April to October 2019 amounted to $350.74 billion, $6.52 billion or 1.8% less than the budgeted $357.26 billion. Recurrent expenditure which totalled $319.47 billion, accounted for 91.09% of overall expenditures. Relative to projections, recurrent expenditure was $5.69 billion (1.8%) less than budgeted. Of the recurrent expenditure categories for the review period, all categories were below the budgeted amount except ‘Wages and Salaries’. ‘Programmes’ which amounted to $118.64 billion, was $2.63 billion or 2.2% less than projected. Whereas, ‘Compensation of Employees’ which amounted to $123.65 billion was $274.30 million or 0.2% less than projected. In addition, ‘Employee Contribution’ totalled $9.04 billion, 4.5% less than the budgeted amount of $9.40 billion. However, Wages & Salaries’ amounted to $114.61 billion and was $150.80 million or 0.1% more than projected.

As a result of the decrease in Expenditures for the period April to October 2019, the ‘Fiscal Surplus’ was $8.02 billion, relative to a projected deficit of $2.89 billion. Additionally, the primary balance for the period amounted to $85.21 billion, 10.5% more than budgeted.

As part of the Memorandum of Economic and Financial Policies (MEFP), the GOJ estimates that the primary balance, as a performance criterion, should amount to $140.01 billion by the end of the 2019/2020 fiscal year. Up to the September quarter, a primary balance of $35.70 billion was estimated. As at the end of October 2019, this amounted to $85.21 billion. Tax Revenue is expected to total an estimate of $570 billion by the end of the March quarter. The reported tax revenue for the end of October 2019 was $317.58 billion.

Revised Budget

 

Deviating Occurrences Leading to Supplementary Budget

YTD, the government for the most part has outperformed its targeted revenue while keeping most expenditure line items below budget.

However, the emergence of additional expenditure requirements since the approval of the budget in March 2019 has necessitated the formulation of a supplementary budget. According to the Ministry of Finance, “The First Supplementary Budget for FY 2019/20 is developed against the backdrop of continued positive performance in total revenue, evidenced by the better-than-budgeted Tax Revenue collections for the April to July period of the fiscal year.”

Although Expenditure was $4.68 billion below target, the significant factors that led to a supplementary budget were:

The additional non-debt recurrent expenditure being facilitated relates to allocations towards, inter alia:

• Addressing critical payments to facilitate the continued smooth operations of the Tax authorities;
• Facilitating the refund of customs charges which were misclassified as GCT and paid into the Consolidated Fund;
• Pensions related expenditure, including the additional cost of implementing the rate increase to the health scheme for pensioners; and
• Addressing the shortfall in the 2019/20 allocation for the Caribbean Catastrophe Risk Insurance Facility (CCRIF) premium payment.

Major Infrastructure Development Programme (MIDP) of $5 billion

With regards to the Major Infrastructure Development Programme (MIDP), another $5 billion has been allocated to fund, among other things, corrective work for residents whose homes were impacted by the roadworks in St James and Westmoreland.

The MIDP, which includes the upgrading and expansion of major roadways across the island, is being funded through a loan from the Exim Bank of China and the Jamaican Government.

• Some additional items:
• Jamaica Water Resources Development Master Plan – $655 million
• $550-million funding for the Montego Bay Closed Harbour Beach Park – $164 million added
• Great Climate Readiness Programme – $60 million added.

Debt Service of $45.50 billion

Debt service is estimated to increase to $45.50 billion.  As indicated by the Ministry of Finance, “this comprises $40,205.0mn in amortization and $5,295.4mn in interest payments. The increase in Public Debt Service reflects the impact of recent liability management activities.”

The First Supplementary Estimates is expected to be financed as follows:

• Reallocation of Resources within the Original Approved Budget

• Additional expenditure is expected to be financed through the increased space afforded by the positive revenue performance as well as through the adjustment of the targeted primary balance arising from the lower growth forecast

According to the Government, “The medium-term fiscal profile reflects updated projections that are consistent with the adjustments to the medium-term macroeconomic outlook as well as with the fiscal policy priorities of the GOJ.”

 

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