Jamaica’s Budget in a COVID-19 Environment: Competing Priorities Among Scarce Resources
Without doubt, Jamaica’s FY2021/22 budget, as presented by Dr. Nigel Clarke, is the outcome of an incredibly difficult task of choosing the top priorities relative to the significant constraints on available fiscal resources, to boost economic recovery. Various macroeconomic studies have pointed to ‘counter-cyclical’ fiscal measures as the appropriate policy response from a government trying to escape the clutch of a vicious economic crisis. But, for Jamaica, which is still highly indebted, it is a delicate calculus to solve for the optimum fiscal spend subject to the constraints of limited resources and also the need to maintain fiscal prudence, which is at the core of macroeconomic stability.
In view of the foregoing, the GOJ’s cautious approach seems warranted, and the ‘Social and Economic Recovery and Vaccine Programme’, or the ‘SERVE Jamaica Programme’, which is the Government’s $60 billion policy response to resuscitate the Jamaican economy is a practical response to generate economic activity as quickly as possible. The SERVE programme represents 11% of non-debt expenditure or 7.2% of the Government’s planned budget of $830.8 billion. The lowering of the debt remains paramount as it increases fiscal space, thereby allowing direct spending on growth inducing initiatives. This document gives our insights on the budget.
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