Overview

The Budget for 2004/05 was developed within the medium term framework set out below:

FY2004/05 Budget is forecast at $328.2bn with recurrent expenditure amounting to $187.6bn, capital $8.5bn and amortization at $132.1bn. Tax revenues and grants are projected at $175.7bn and loan receipts at $152.4bn. The fiscal profile is set out below (in J$bn):

Expenditure and Amortization

The 2004/05 Budget amounts to $328.2bn and is allocated between Recurrent and Capital expenditure as follows:

This budget is an increase of $49bn or 17.5% over the 2003/04 Revised Budget. The Recurrent Budget is broken out as under:

The Capital Budget is allocated as follows:

The major areas of expenditure continue to be Debt Servicing, Education, Security and Health Services.

Debt Servicing

Debt servicing amounts to $228.4bn or 69.6% of the total Budget. This compares with $187.07bn or 67% of the 2003/04 Revised Budget. The comparative breakout of the debt servicing allocation is shown below in J$bn:

An analysis of the domestic and external debt servicing obligations projected for 2004/05 is provided below.

Domestic Debt Service

Interest

In terms of domestic interest payments, $73.7bn has been allocated, which is about the same as for the Revised 2003/04 Budget.

Amortization

The programmed domestic amortization is $102.1B, which represents an increase of 27.2% over FY2003/04. This increase results from a higher volume of debt maturing during FY 2004/05.

External Debt Service

Interest

The amount of $22.6bn has been allocated for interest payments on external debt. This compares with $17.2bn allocated in the 2003/04 Revised Budget, an increase of $5.4bn. The main reasons for this variation are:

• Change in the expected disbursement pattern in the international capital market issues.
• Interest cost of $1.6bn on projected new borrowings in the international capital markets and from multilateral/bilateral organizations in FY 2004/05.
• Increased provision for contingent payment on guaranteed loans and loan raising expenses. Loan raising expenses has been increased by approximately J$45mn and a provision of J$255.6mn has been made for interest charges arising out of the invocation of government guarantees and expenses incurred in raising loans on the international market. As a result the total variation approximates J$300.6mn.
• Exchange rate adjustments.

Amortization

The amount of $30.0bn projected for amortization of the external debt is $14.0bn higher than the revised allocation for FY 2003/04. This increase is a result of the following factors:

• The structure of the amortization schedule. An increasing share of GOJ's external debt portfolio consists of international bond issues. These bonds are repayable in bullet payments and this normally creates a spike in the external debt service profile. The estimates for FY 2004/05 include $13.8bn to repay the Euro175mn 10% bond which becomes due in August 2004.
• Unfavorable exchange rate (parity changes). The weakening of the J$ vis-à-vis the US$ on the one hand, as well as the revaluation of the debt portfolio based on the weakening US$ vis-à-vis major currencies, such as the Euro, the Yen and the Pound Sterling, will inflate the external portion of GOJ debt in Jamaica dollar.

Education Services

The Ministry of Education, Youth and Culture has been allocated a total of $30.21bn to undertake recurrent and capital programmes. This accounts for 9.2% of the total 2004/05 Budget or 30.3 % of the total non-debt Budget. As in previous years, outside of debt servicing, the education services through the Ministry of Education, Youth and Culture, has been allocated the largest share of the 2004/05 Budget.

Recurrent

The allocation for recurrent expenses amounts to $29.56bn. Wages and salaries account for $22.8bn or 77% of the recurrent budget for Education with the remaining $6.7bn or 23% going to the other support services. The major areas of expenditure are:

• Primary Education - $9.2bn. For 2004/05, activities include continuing the implementation and monitoring of the revised primary curriculum and providing literacy remedial programmes for students in grades 4, 5 and 6.
• Secondary Education - $8.4bn. The main focus of the secondary education programme is the implementation of the Universal Secondary Education programme, which aims to provide 5 full years of secondary education for all students entering Grade 7. An amount of $70mn has been allocated to the Secondary Enhancement programme to provide support for newly upgraded high schools in order to build comparable standards with traditional high schools.
• Tertiary Education - $5.6bn. The major allocation of $4bn is to the University of the West Indies, a 60% increase over the 2003/04 provision of $1.6bn. This represents the Government of Jamaica's full contribution to the University of West Indies for FY2004/05. Included in this allocation is $150mn for the teaching component being offered by the University Hospital of the West Indies (UHWI).
• Early Childhood Education - $1.3bn. Activities under this programme focus on the development of children up to age 5 and the allocation provides a subsidy to basic schools. There will also be the continued upgrading of Resource Centres, the full integration of Day Care into the Early Childhood Programme and the training and certifying of Basic School Teachers through the National Council on Technical and Vocational Education and Training (NCTVET) courses.

Capital A (Government of Jamaica Funded Projects)

The allocation of $170.8mn includes $74.5mn to service the deferred financing facility for eleven (11) schools under the UDC/WICHON St. Catherine's school project that falls due in this fiscal year. The rest of the allocation will allow the Ministry to continue to undertake maintenance of buildings and provide furniture and equipment to selected schools.

Capital B (Multilateral/Bilateral Programmes)

The allocation of $482.8mn in 2004/05 represents funding for five (5) projects, four (4) of which are ongoing and one completed, for which final payments will be required. The completed project is the Reform of Secondary Education (Rose 1) project. Focus has been placed on the development of Primary Education with $294mn or 61% of the Ministry's Capital B budget being allocated to this programme. In addition, $131.8mn has been allocated to Secondary schools and $57mn to Basic schools.

New Horizons for Primary Schools (USAID)for which $46.9mn is allocated. This 5-year project has an objective to increase numeracy and literacy in targeted schools through the provision of quality education. The main targets will be:

• Training 200 school board members in specific areas of governance and leadership and hosting one parent education conference.
• Continue the development and implementation of individualized mathematics and reading programmes through the holding of workshops with teachers and principals. Resource specialists will also be utilized in 72 primary schools.
• Developing training modules.
• Maintaining and supporting the educational technology resource centre located at the College of Agriculture, Science and Education (CASE).

Primary Education Support Project (IDB)for which $247.1mn is allocated. This project contributes to the improved performance and efficiency in the Primary Education system through the effective implementation of the revised primary curriculum and the National Assessment Standards in all Primary Schools. The project is slated to end in December 2005.

Achievements

Notable achievements as at December 2003 include: 8,000 teachers have been trained in the use of the revised primary curriculum; 27 fellowships granted for MSc. and PH.D. programmes; 50 principals were trained overseas and 235 are expected to complete training locally under the Principal Diploma Programme.

For 2004/05 this project will carry out the following:

• Complete manual (grade book and procedures) for teachers of multi-grade schools.
• Develop literacy intervention training programmes for resource teachers.
• Produce supplementary readers for 509 primary schools.
• Commence construction of two phase 1 schools.
• Implement pilot project in instructional technology.
• Train second cadre of principals locally and overseas under the Principals Diploma Programme.
• Continue the study to automate the GSAT registration and placement process within the Ministry of Education, Youth and Culture.

Reform of Secondary Education Project - ROSE (Phase 2)
The allocation to this project totals $131.8mn. Through this project, there will be continued improvement in the quality of Secondary Education through school based initiatives and reform support, the expansion of access to Upper Secondary Education through the building of new schools and the extension and refurbishing of schools. Another objective is strengthening the capacity of the Central Ministry and Regional Offices in order to better manage the reform process. The project has been extended to September 2007.

Achievements

Among the achievements of this project as at December 2003 are: 300 school improvement manuals were printed; in-service training in Region 3 were completed; 368 grades 10 and 11 spaces were provided for students in Independent schools; 6 Regional Review panels were established; pre-contract work for 4 school sites were continued.

• Funding the implementation of 99 school-improvement plans.
• Printing 70,000 copies of guidance and counseling manuals.
• Training 1,800 Heads of Departments, College Lecturers and Education Officers in the use and supervision of the ROSE curriculum.
• Purchase 1,800 copies of Grade 7 Supplementary Readers.
• The provision of Secondary School places for approximately 368 students in Independent schools.
• Complete pre-contract work for 4 school sites.

Enhancement of Basic Schools (CDB)for which $57mn has been allocated. The objective of this 4-year project is to enable young children to learn and develop optimally.

Achievements up to February 2004 include: continuing the collection of baseline data; continued final drawings for 5 sites in package 1 and completing Terms of Reference for consultants who assist with the design and specifications of furniture, play and learning equipment.

For 2004/05 the project plans to:

• Complete pre-contract work for civil works.
• Reproduce 3,000 Early Childhood Policy and Standards Documents and 1,000 student manuals.
• Commence training of 240 Basic School Teachers.

SECURITY AND JUSTICE SERVICES

These services together have been allocated $17.1bn, which represent 5.2% of the total Budget and 17.2% of the non-debt Budget. Of this allocation, $16.8bn relates to recurrent programmes and $0.3bn has been allocated to capital projects under the Ministries of National Security and Justice.

Recurrent

Ministry of National Security (MNS)
In respect of the Ministry of National Security and its departments and agencies, $15.0bn (gross) has been allocated for the following services (in J$mn):

Jamaica Defence Force (JDF)	3,010.6
Electoral Office	516.6
Ministry activities	802.0
Police Department	8,895.4
Correctional Services Dept	1,763.0
Total	14,987.6

The composition of the 2004/05 budget of the Ministry of National Security and its departments are set out below:

Composition of 2004/05 Recurrent Estimates of Expenditure$'000,/b

Ministry of National Security	Salaries	Other	Total Estimates
Electoral Office	225,430	291,147	516,577
Jamaica Defence Force	2,684,400	326,179	3,010,576
Ministry Activities	308,293	493,701	801,994
Total Gross Head 2600	3,218,123	1,111,027	4,329,150
Less Appropriations-in-aid (passport fees)			287,100
Police Department	7,200,000	1,695,363	8,895,363
Department of Correctional Services	1,297,064	465,904	1,762,968
Total (gross Ministry of National Security	11,715,187	3,272,294	14,987,481

Ministry of Justice

This Ministry and its departments have been allocated $1.8bn for recurrent expenditure in the 2004/05 Budget. The composition of the Ministry of Justice and its departments budget are set out below:

Composition of 2004/05 Recurrent Estimates of Expenditure$'000

Ministry of Justice	Salaries	Other	Total Estimates
Ministry of Justice	166,162	305,258	471,420
Court of Appeal	53,666	7,608	61,274
Director of Public Prosecutions	66,601	47,696	114,297
Family Courts	60,000	22,052	82,052
Resident Magistrates' Courts	343,280	65,602	408,882
Revenue Court	4,140	375	4,515
Supreme Court	201,121	89,583	290,704
Administrator General (Gross)	86,466	13,555	100,021
Attorney General	107,046	140,135	247,181
Trustee in Bankruptcy	14,053	4,937	18,990
Office of the Parliamentary Council	29,801	6,306	36,107
Total Ministry of Justice>	1,132,336	703,107	1,835,443

Capital

A total of $326.2mn has been allocated in 2004/05 for capital expenditure in respect of the Ministries of National Security and Justice. The major components are:

Ministry of National Security	$mn
Police - for acquiring vehicles, telecommunications equipment and improvements to Police Stations	95.0
Citizens Security and Justice Project (IDB)	110.0

The major activities to be undertaken by the project at (ii) include:

• Refurbishing juvenile correctional centres and Family Court building in Kingston/St. Andrew
• Training 7 members of the Board of Visitors
• Training staff of the Department of Correctional Services
• Procuring computers and camcorders for Victim Support Unit

Initiating work for the refurbishing of the Transformation Centre.

Ministry of Justice

An amount of $116.2mn has been allocated as follows:

In terms of item (i) this allocation is expected to cover repairs to fourteen (14) courthouses. In terms of item (ii) the Justice component will seek to improve the delivery of judicial services. The provision of $16.2M is intended to retain the services of a Clinical Psychologist and also acquire equipment for the Family Court.

HEALTH SERVICES

The Ministry of Health and its departments have been allocated $15.6bn or 4.7% of the overall Budget for capital and recurrent programmes. This allocation represents 15.6% of the total budget net of debt, up from 13% of the Revised 2003/04 Budget. Wages and salaries account for $10.8bn or 72% of the total budget for the Ministry of Health and its departments.

Recurrent

The allocation to the Regional Health Authorities, excluding an allocation of $2.5bn for outstanding statutory deductions, is $9.72bn or approximately 88% of the Ministry of Health's budget up from 76% for 2003/04. The Southeast region, comprising the parishes of St. Catherine, Kingston and St. Thomas continues to be allocated the largest share, followed by the Western region, comprising the parishes of Trelawny, St. James, Westmoreland and Hanover. The 2004/05 provision also includes:

• $286mn for pharmaceuticals and medical supplies for hospitals and health centres (included in the amounts allocated to the regions).
• $1.9bn for the University Hospital. This Hospital is financed by contributing West Indian Territories. Currently, 91% of the institution's budget is met by Government of Jamaica (GOJ) with the remaining 9% being funded by other territories. In relation to GOJ contribution, 68% is financed through the Ministry of Health's budget and 23% through the Ministry of Education, Youth and Culture. The latter portion relates to the teaching component (tertiary level courses) offered by the hospital.
• $169mn for training of health professionals.
• $50.8mn for the Jamaica Drug for the Elderly Programme (JADEP).

$79mn for vaccines.

Capital Projects

A total of $587.3mn has been allocated to capital projects under the Ministry of Health. The major on-going projects are:

Capital B

Jamaica HIV/AIDS Prevention and Control project (IBRD) -($138.9mn) It is expected that during 2004/05 the project will, among other things, develop and undertake a media campaign to reach 500,000 adults.

Improved Reproductive Health of Youth (USAID) The amount provided for this project is $67mn and the activities for 2004/05 include:

• Complete research on adolescent health resiliency factors that delay sexual initiation in 12 - 16 year old children.
• Follow up training for master trainers, health care providers, church leaders and others.
• Targeting community interventions for pre-teens, inner-city adolescents and others working and church parenting groups.

AIDS/STD (USAID)

• Maintain HIV testing and counseling among sentinel groups.
• Strengthen services in STI clinics.
• Improve laboratory efficiency.
• Establish sustainable quality assurance and standard HIV care.
• Reduce prenatal HIV/STI transmission and congenital syphilis.

In addition to the on-going projects some new projects are to be implemented in FY 2004/05. These include:

HIV/AIDS Treatment Prevention and Control Programme In Jamaica (Global Fund) An amount of $194.0mn has been allocatedwhich has been allocated. This project will be financed through a global fund grant and its main objective is to strengthen the multi-sector national response to prevent and address the HIV/AIDS epidemic in Jamaica, through:

• Providing anti-retroviral drugs to both children and adults living with HIV/AIDS
• Promoting safer sex practices, including abstinence, especially among sub-populations and marginalized groups.
• Completing and implementing policies and legislative framework specially addressing the stigma and discrimination aimed at people living with HIV/AIDS.

This project is also expected to achieve the following in 2004/05:

• Educate 500,000 teachers and students through printed manuals and workbooks.
• Educate 800,000 persons from both private and public sectors about workplace policy.
• Launch public education and sensitization campaign to reach 1.2 mn persons.
• Provide 600 patients with anti retro-viral drugs.
• Increase condom access to 100,000 adolescents through dispensing machines.

Enhanced Caribbean Response to HIV/AIDS (USAID) The provision for this project is $40.1mn and its main objective is to respond to the HIV/AIDS crisis by establishing a HIV/AIDS regional training, education and research centre in Kingston, Jamaica.

The HIV/AIDS Prevention and Control Project supports selected activities of Jamaica’s national HIV/AIDS Strategic Plan. The objectives of the project are to: assist the government in curbing the spread of the HIV epidemic; improve treatment, care and support for people living with HIV/AIDS; strengthen Jamaica’s capacity to respond to the epidemic.

OTHER PROGRAMMES/PROJECTS

Other significant allocations in the 2004/05 Budget include:

• Water projects.
• The Social Safety Net - PATH (Ministry of Labour and Social Security).

Water Projects
A total of $1,194.7mn has been provided in the 2004/05 Budget for water supplies of which $563.3mn relates to recurrent expenditure and $632.4mn to capital projects.

Capital A
For FY2004/05 there has been an increase of 81.2%. The majority of the funds provided are to accommodate the upgrading and completion of the new treatment plant at Roaring River in connection with the Darliston Water Supply Scheme. The upgrading of this water supply scheme will benefit the immediate residents as well as surrounding areas. In addition, $47M has been allocated to the Rapid Response Water project.

Capital B

An allocation of $432.4mn has been provided, representing an increase of $387mn over the 2003/04 Revised Estimates.

Social Safety Net - Programme of Advancement through Health and Education (PATH) The 2004/05 provision for PATH is $1,100mn, which represents an increase of $620mn over the 2003/04 Revised Budget. This programme is the major contributor to the Ministry's public assistance programme. Through the project, the Ministry will be increasing the level of grant assistance to the public by 117% (from $445.0mn to $968.8mn) during FY2003/04.

FINANCING THE 2004/05 BUDGET

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