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OverviewThe FY 1998/99 budget is designed within a medium-term economic programme. The programme will gradually reduce the fiscal deficit, delivering a surplus by FY 2000/01.
Achieving and maintaining single digit inflation, accumulating Net International Reserves (NIR) and providing assistance to the financial sector has been at tremendous cost to the budget. The difficulties have been compounded by less than programmed revenue inflows. In recognition of the challenges that lie ahead, the budget has been carefully crafted to allow efficient allocation of scarce resources. The non-wage, non-debt component of expenditure has remained constant at just under $35 billion in nominal terms between FY 1997/98 and FY 1998/99. This reflects a decrease in the real cost of delivering services. Greater efficiency will allow for further cost containment.
The FY 1998/99 expenditure budget totals $130.1 billion. Recurrent expenditure accounts for $85.1 billion (65.4%) and capital for $45.0 billion (34.6%). The expenditure budget represents a 13% increase over the FY 1997/98 revised budget and a 22% increase over the FY 1997/98 approved budget.
Of the recurrent budget, $46.2 billion is allocated for normal operating expenses, $34.4 billion is allocated for interest and $4.4 billion is allocated for contingencies. Of the capital budget, $10.9 billion is allocated for capital programmes (projects), $33.5 billion is allocated for amortisation, and $0.6 billion is allocated for the IMF#1 Account. Debt servicing (interest and amortisation) accounts for 52% of the total budget.
The largest share of the budget after debt is allocated to Education Affairs and Services (13%). This reflects Government's commitment to the sector. General Services (net of debt servicing) has been allocated 10%, Health Affairs and Services 5.6%, Public Order and Safety 5.1%, and Roads 1.7%. The contingencies provision accounts for 3.7% of the budget with other functional areas receiving allocations between 0.8% and 1.6%.
In FY 1998/99 compensation to employees accounts for 21.6% of the budget compared to 22% in FY 1997/98 and 17% in FY 1996/97. Education accounts for 40.8% of the wage bill, Public Order and Safety 16.2%, Health Services 12.2%, General Government Services 9.3% and other functional areas 21.5%.
The budget will be financed by a combination of revenue, grants, and loan receipts from local and foreign sources. There will be a tax package and adjustments to some user fees. The Tax Administration Reform Project (TaxARP) will also improve revenue collections through increased compliance and a broadening of the tax base.
Interest payments account for 40% of the
recurrent budget, up from 35% in the FY 1997/98 revised budget and 32% in the FY 1997/98
approved budget. Wages and salaries constitute the highest portion of non-debt
expenditure. The FY 1998/99 budget includes a block provision of $3.9 billion for salary
increases to public sector workers relating to the FY 1996/98 contract period.
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EDUCATION AND CULTURAL DEVELOPMENT
In keeping with Government policy, priority has been accorded to the Ministry of Education and Culture in this year's budget. The allocation of $17.2 billion represents 13% of the total budget. Of this amount, $15.6 billion relates to recurrent expenditure and $1.6 billion to capital projects.
Recurrent
Education has been allocated 18% of the total recurrent budget. To achieve Education's objectives, a number of new activities will be incorporated under the following existing programmes:
Early Childhood Education
Introduction of "Care-Givers" in infant departments of primary schools. This category of staff is currently operating in infant schools.
Primary Education
This programme remains the priority with an allocation of $5 billion, 32% of the Ministry's recurrent budget. The Ministry will continue implementing on-going activities to improve the quality of primary education.
Secondary Education
Secondary education has received an allocation of $4.3 billion, 27.5% of the Ministry's recurrent budget. The programme covers the following areas:
$71 million has been allocated to assist students at the secondary level who are unable to pay school fees. The amount earmarked for secondary education reflects an increase of 50% over the FY 1997/98 revised budget.
Tertiary Education
A multi-disciplinary college will be established by the conversion of Bethlehem Teachers' College.
Adult Education
Computer-assisted learning projects will be introduced in five adult education centres. A database facility will be established at Jamal Headquarters to assist volunteer teachers.
Capital
The Ministry of Education and Culture's Capital A Budget of $646 million represents an increase of 160% over the FY 1997/98 revised budget. Included in the capital allocation is a sum of $446 million representing debt forgiveness by the British Government. The funds will be distributed to infant schools ($9.2 million), primary schools ($161.2 million), all-age schools ($139.9 million), high schools ($101.0 million) and teachers' colleges ($35.0 million).
These funds will be used in these institutions for the following activities:
The Ministry of Education's Capital A budget also provides for:
The Ministry's Capital B budget has been allocated $918 million for projects jointly funded by multilateral/bilateral institutions. Of this amount $516 million relates to civil works to:
A Technical/Vocational Education and Training Improvement Project funded by the Japan International Co-operation Agency will start this year. This project is designed to:
This fiscal year the Ministry will complete the implementation of the Secondary School Textbook Project, the Social Sector Development Programme and the Family Life Education Project.
The Ministry will commence implementation of the New Horizon in Primary School Project, funded by USAID. This project is designed to:
The FY 1998/99 provision for the Ministry of Health and its departments represents 7.4% of the total recurrent budget. The major programmes are primary, secondary and tertiary health care. These programmes have been allocated 88% of the Ministry's recurrent budget.
Primary Health Care (PHC)
PHC, provided at the community level through various health centres, has been allocated $1,295 million or 22% of the Ministry's provision. The services to be provided include:
Secondary and Tertiary Health Care (STC)
STC is provided mainly at 24 hospitals island wide. This programme has been allocated $3,870 million, 66% of the Ministry's recurrent budget. This allocation will facilitate:
Capital projects have been allocated $950 million. The Health Services Rationalization Project and the Health Sector Reform Programme have been allocated $598 million and $112 million, respectively.
Full implementation of the Health Sector Reform Programme will commence during FY 1998/99 with continued focus on the establishment of the National Health Insurance Plan.
For the Health Services Rationalisation Project, FY 1998/99 targets include the continuation of civil works at Kingston Public, Mandeville and St. Ann's Bay hospitals as well as the provision of equipment for Mandeville and St. Ann's Bay hospitals.
A total of $573 million has been allocated to water supplies, an increase of $264 million over the FY 1997/98 revised budget and $142 million over the FY 1997/98 approved budget. Approximately 87% of this allocation relates to capital projects, primarily those managed by the National Water Commission. Capital A has been allocated $360 million. Phase 1 of the Darliston Water Supply Project, including installation of transmission pipelines, and the Cambridge/Bethel Town Project should be completed in FY 1998/99. New projects include the Christiana/Spalding and Santa Cruz/Malvern projects.
Christiana/Spalding (Manchester)
This project will develop a new water source to augment the existing declining source and provide an adequate transmission system to Christiana/Spalding and its environs. The FY 1998/99 allocation of $5 million covers the design of the intake and transmission systems.
Santa Cruz/Malvern (St. Elizabeth)
This project consists of three phases costing $145 million. The project will provide an adequate and reliable water supply to the town of Santa Cruz and its environs. The present source provides only 50% of current demand. The FY 1998/99 allocation of $5 million covers engineering and project management costs.
National Irrigation Commission
$20 million has been allocated for continued lining of canals to prevent water loss through leaks/cracks in the concrete. Yallahs Irrigation has been allocated $12 million for the construction of wells, installation and rehabilitation of water meters, rehabilitation of the micro-dam and a feasibility study for constructing reservoirs. Other capital works has been allocated $34 million to undertake rehabilitation and installation of irrigation equipment for use in mid-Clarendon.
Capital B has been allocated $508 million for the following projects:
The Catchment Tank Rehabilitation project was started in 1989 in collaboration with the Caribbean Development Bank. To date 173 tanks have been completed. The FY 1998/99 allocation is to continue rehabilitation of defective tanks.
Agriculture accounts for 1.5% of the budget. $1,907 million has been allocated to this function relating primarily to the operation of the Ministry of Agriculture. Research and development, planning, and marketing are priorities. Allocations to these areas have been increased in the FY 1998/99 budget.
Research and development has been allocated $36 million, a 107% increase over the FY 1997/98 revised budget. $12 million has been allocated to purchase equipment and repair the research stations at Bodles and Montpelier.
The Plantation Development Project has been allocated $35 million, a 149% increase over the FY 1997/98 revised budget. This large-scale reforestation programme is aimed at abating environmental degradation.
Capital B includes two new projects:
Eradication of the New World Screw-Worm
This three-year project is funded by the Government of Jamaica, the US Department of Agriculture and the International Atomic Energy Agency. The objective is to eradicate the new world screw-worm through sterile insect techniques supported by prevention, control and quarantine measures. $108 million has been allocated to this project to purchase and install laboratory equipment and upgrade offices, laboratories and storage facilities.
Development of Small-Scale Fisheries
This one-year project is funded by the OECF. $4 million has been allocated to construct onshore fishing facilities and an access road, provide fish handling facilities, and provide water, electricity and telephone connections.
A total of $3 billion has been allocated to this function, relating primarily to the Ministries of Industry and Investment, Commerce and Technology and Tourism. Of this, $2,200 million (73%) has been allocated for recurrent expenditure. This includes the Jamaica Tourist Board ($1,119 million), JAMPRO ($343 million) and the Tourism Product Development Company ($137 million). The Jamaica Tourist Board allocation has been reduced from FY 1997/98 reflecting the shift in emphasis from advertising to product development. Developing the tourism product will increase visitor satisfaction and eventually attract more visitors.
Capital expenditure has been allocated to the Ministry of Industry and Investment for:
Capital expenditure has been allocated to the Ministry of Tourism primarily for development of the tourism product.
A total of $2,200 million or 1.7% of the budget has been allocated to roads. In addition, $280 million is to be made available to Parish Councils from the Parochial Fund, funded by motor vehicle licences proceeds and administered by the Ministry of Local Government, Youth and Community Development for the maintenance of parochial roads.
Northern Jamaica Development Project
$800 million has been allocated to complete the South Gully sub-project and continue construction works and complete land acquisition on segment 1 of the Northern Jamaica Development Project (Negril to Montego Bay).
Road Rehabilitation Project (HUB).
$377 million has been allocated for the completion of some roads started in FY 1997/98 and to commence the Melrose Hill deviation between Trinity and Williamsfield, Manchester.
Old Harbour By-Pass Road
$200 million has been allocated to complete the acquisition of lands and for consultancy services.
Maintenance of Urban Roads
$115 million has been allocated for routine maintenance of main roads in the corporate area. The drainage problem in South Camp Road at the intersection with Victoria Avenue will also be corrected.
Traffic Management
$113 million has been allocated for the widening of corporate area roads (Waterloo Road between Annette Crescent and South Avenue), construction of road dualisation (to Manor Park), installation and rehabilitation of traffic lights, procurement of street and traffic signs and road marking paint.
Jamaica/Canada Bridge Development Programme
$94 million has been allocated for the construction of new bridges and completion of construction work and maintenance of bridges island wide
Total revenue and loan receipts for FY 1998/99
are projected at $126, 951 million. This is a 16.8% increase over the FY 1997/98
provisional Consolidated Fund receipts of $108,681 million net of Treasury Bills.
REVENUE
Revenue is estimated at $80,888 million or 62.2% of the budget. This is broken out as follows:
Tax Revenue
Tax revenue accounts for 88.3% of total revenue. Tax revenue in FY 1998/99 is projected to increase by 18.9% over the provisional outturn of $60,101 million for FY 1997/98. The estimates are consistent with projections contained in Government's macro economic programme which assumes:
The projections for FY 1998/99 exclude land and property tax and two-thirds of the collections from motor vehicle licences. These amounts will go to the municipal bodies rather than Central Government.
Non-Tax Revenue
Non-tax revenue in FY 1998/99 is projected to increase by 12.8% over the provisional outturn for FY 1997/98. Of the estimated $3,524 million in non-tax revenue, Departmental and Miscellaneous revenue is estimated to yield $2,070 million or 59% of the total. Interest income on balances in Government accounts is expected to yield $1,096 million or 31% of the total.
Capital Development Fund Transfers
Transfers from the Capital Development Fund (CDF) are estimated at $3,272 million.
Capital Revenue
Capital revenue is estimated at $2,633 million of which $1,119 million is expected from grants. $446 million in grant funding will be realised from the UK Government's debt forgiveness programme. The proceeds are earmarked to finance specific projects in the Ministry of Education.
LOAN RECEIPTS
Loan receipts are projected at $46 billion, an increase of $6 billion over the estimated outturn for FY 1997/98.
External Loans
External loan receipts are projected at $19 billion, $9 billion more than in FY 1997/98. The programme includes $4 billion in project loans and US$400 million to be raised on the international capital markets. US$100 million of this US$400 million will be used to take out the 364-day Citibank bridge financing loan raised in December 1997.
Domestic Loans
Domestic loan receipts are projected at$27 billion. This will be used to replace securities due for amortisation and for budgetary support.
The gap will be financed by $3.7 billion of new taxes and $0.5 billion of user fees.
New Taxes
The proposal is to levy new taxes and fees as outlined in the Ministry Paper tabled in the House.
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