Robertson

It is difficult not to feel like one has been thrust into an alternative universe following the tabling of the first supplementary estimates in the House of Representatives on Tuesday by the finance minister, Audley Shaw.

If the original revenue estimates have been shot to pieces over the first five months of the current financial year, to the extent that it was necessary to do a complete revisit of the budgetary estimates, how does the Government expect to finance an even larger expenditure? Or are we prepared to run a larger fiscal deficit?

And what about the ballooning off-balance sheet transactions? As at March 31, 2009, the outstanding stock of Government of Jamaica (GOJ)-guaranteed debt disbursed stood at US$868 million, or J$77 billion. The public sector agencies holding this debt include:

Then there are the other accumulated losses for entities such as the Sugar Company of Jamaica, and the Jamaica Urban Transit Company that are looming in the background. When will these debts be brought on to the books of central government?

Other funding

The impression that is being given is that everything is OK with the IMF for the 'little' increase in expenditure that will take place this year, and what the fund is more interested in is Year Two to Year Five of the Medium-Term Economic Programme. Further, the Govern-ment will be able to finance the additional expenditure for the rest of the fiscal year with funds which they will be receiving from the other multilaterals, particularly the Inter-American Development Bank, which, according to reports, is simply standing by waiting to disburse funds to the GOJ as soon as the IMF agreement is in place.

Mixed signals are being sent on this position by the two sides. However, even if one accepts the argument that the IMF will allow the Government to run a higher-than-originally budgeted deficit during the current fiscal year, how can the Government credibly defend the slashing of the budgets to the three critical production ministries - tourism, transportation and works, and mining and energy?

Cutting a vital lifeline

The first two sectors have the ability to keep persons employed across the country, and in the case of tourism, to earn valuable foreign-exchange inflows in the current fiscal year. In the case of the Ministry of Energy and Mining, Minister James Robertson needs to ramp up the sourcing of LNG and to change the country's energy mix in the shortest possible time.

The biggest cut in the tourism ministry's budget was in overseas marketing. At a time when the entire worldwide tourism industry is struggling to survive, we are cutting the marketing lifeline of this vital industry. The mantra of tourism minister, Ed Bartlett, is that we need "heads on beds" to keep the occupancy levels up and to increase revenue flows (and ultimately the retention of jobs) in the critical sector.

Instead of spending in these critical areas, we have increased the allocation for interest payments by a further J$16.2 billion - with $15.7 billion of this amount earmarked for interest rate increases on domestic debt that was not anticipated in the original budget five months ago! Included in this is an additional $2 billion to the Bank of Jamaica (BOJ) for increased interest rates on special BOJ issues.

One wonders what would have happened if, say, 50 per cent of this interest payment increase had been given to the productive sector to provide a jump-start for the way forward. As it stands, these revisions to the estimates of expenditure do not represent the best possible use of the country's scarce resources.

renee.shirley@yahoo.com