Government must reconcile in the 2008-2009 Budget an increased pay package for nurses, police and other civil servants, as well as user- and tuition-fee removal from public hospitals and schools.

Finance Minister Shaw said, however, that people should not expect the Government to wave a magic wand, admitting that it would have to borrow to shore up the budget. According to him, government hopes to borrow at lower rates of four and five per cent from multilateral agencies.

Financial analyst Errol Gregory commenting on the upcoming budget presentations, said that there is no doubt the Government would have to borrow, but argued that the pressure would be less as there are not that many debt payments to be made to international agencies this year.

"I think we will see them continue the strategy of borrowing in the overseas market to deal with any overseas debt payment," comments Gregory. "We don't have a substantial amount of debt payments that are due until February 2009, so the Government has some breathing space," he continued. He added that Government seemed confident that it would reach or get close to its deficit target this year.

Wastage

But Gregory is expecting the Government to reveal more about how it will end wastage in the public sector and, in keeping with its campaign promises, say how it will nail corruption in order to save more.

"That is where I think the emphasis will be. On the matter of widening the [tax] net, that has been a perennial problem, but the Government so far appears to be willing to take on that one," said Gregory. Apart from its mission to crack down on tax evasion, the Jamaica Labour Party (JLP) said it was committed to reducing income tax for corporate entities to the level of individual income tax.

Strain on the budget

Additionally, the JLP had promised to abolish user fees in public health-care facilities and tuition fees in public secondary schools, two areas that are expected to put a strain on the budget.

It also promised to set aside two- and-a-half per cent of the budget to be divided equally among the 60 constituencies in a constituency development programme.

In last year's contribution to the budget debate as Opposition leader, Bruce Golding said the JLP would subsidise sugar production to the tune of $1 billion.

"A JLP government would be prepared to provide a budgetary price subsidy of US$0.5 cents per pound," Golding said.

Government is also in the uncomfortable position of having to arrive at a memorandum of understanding with public-sector workers. This, while rising oil prices and rising food prices across the globe continue to impact on the cost of living locally.

But, according to Minister of Finance and the Public Service, Audley Shaw, the Government has done well in its six months in office with net international reserves climbing back to almost $2 billion and the Jamaican dollar revalued over the last two weeks to remain at an exchange rate under $72:US$1.