Foreword

Over the past decade, the Jamaican economy experienced mixed fortunes as it sought to foster improved macroeconomic stability. Inflation has been reduced to single digit since 1997, the exchange market has remained relatively stable, and Net International Reserves have increased significantly.

While there was a fiscal surplus over 1990/91 through 1995/96 recent developments have resulted in fiscal deficits over the past three years. The existence of this deficit since 1996/97 was due largely to the accommodation of the costs associated with economic stabilisation and the financial sector rehabilitation on the fiscal accounts. However efforts have been made to reduce this deficit and this has resulted in the deficit moving from 8.3% of GDP in 1997/98 to 4.6% of GDP in 1999/00.

These costs associated with economic stabilisation and financial sector rehabilitation had to be financed and this was done through the accumulation of significant amounts of debt. This high level of debt stock and the corresponding large increase of interest payments have made the debt problem extremely burdensome. The present challenge therefore is to quickly reduce the debt stock, reduce debt servicing costs and place the economy on a growth path.

The 2000/01 Budget is therefore designed to contribute to the attainment of these objectives. This Budget is programmed to generate a fiscal balance. It also contains major projects which should generate new jobs and will provide stimuli for economic growth.

In addition to the need to achieve a balanced budget, more needs to be done to generate sustainable growth and to this end the tight fiscal discipline now in place must continue. In addition, alternate means of financing the much needed infrastructure for enhanced growth must be developed.

These and other challenges are likely to persist but focus over the medium term must be on debt reduction.


                                                                                                                      -Written by the Financial Secretary

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