Wed | Oct 4, 2023

Debt on track for pre-FINSAC low as trillion-dollar Budget tabled

Published:Wednesday | February 15, 2023 | 1:37 AM
Finance Minister Dr Nigel Clarke is upbeat about Jamaica's debt projections.
Finance Minister Dr Nigel Clarke is upbeat about Jamaica's debt projections.

Jamaica’s debt-to-GDP is expected to hit a more-than-two-decade low by March 31, a paradigm shift from a record high of 145 per cent.

Tabling a historic trillion-dollar Budget on Tuesday, Finance Minister Dr Nigel Clarke said that overall public debt is projected to end the current fiscal year at 79.7 per cent of GDP. He said that is forecast to decline further to 74.2 per cent of GDP by fiscal year 2023-2024.

Gross domestic product, or the total value of goods and services produced in Jamaica, was $2.32 trillion as at December 2022, the Statistical Institute of Jamaica has reported.

“Should it (the 74.2 per cent) be achieved … it would mark the first time since the nationalisation of the financial-sector crisis, through FINSAC, in the latter half of the 1990s, that debt has entered the domain of pre-FINSAC levels,” Clarke said.

The positive debt-to-GDP data and the recent Article 4 consultation report from the International Monetary Fund are likely to be considered when next Jamaica’s economy is examined by international ratings agencies.

Jamaica’s upcoming Budget is $23 billion, or 2.3 per cent, more than the $998-billion final Budget for financial year 2022-23, Clarke revealed.

The total recurrent, or day-to-day, expenses are just under $947 billion, while the money allocated for capital projects is just over $75.37 billion for a grand sum of $1,021,672,645,000.

Factoring annual inflation up to December 2022 of 9.4 per cent, that means that the 2023-2024 Budget is, in real terms, 7.1 per cent less than the previous edition.

Reacting to Clarke’s initial presentation, Opposition Leader Mark Golding said there was nothing to celebrate in the trillion-dollar Budget, noting that the cost of living has risen sharply and the Jamaican dollar has depreciated over the years.

Golding told The Gleaner that he is awaiting details of the Budget to see whether it contains significant support for the Jamaican people.

“The fact that it is a trillion dollars indicates that the value of each dollar has really depreciated between inflation and depreciation of the currency over the years,” Golding said.