The Jamaican Government at year-to-date February spent $266 billion running the country, but only collected $215 billion in grants and revenues that left it with a 19 per cent shortfall.

The upshot was that the fiscal deficit jumped to $50 billion 11 months into the fiscal year, and was more than $2.6 billion off target.

To finance that amount of spending, the Government had to over-borrow, but the $129 billion of new debt raised - which was $16 billion more than the finance ministry had originally budgeted for - plus another $4.54 billion boost from divestment proceeds still left the Government $10 billion short at the bottom-line.

Primary surplus

The primary surplus - that number that financial monitors keep watch over to measure how rich the country would be if it were not so heavily indebted - was also $2.6 billion off track, but was nevertheless reported at a healthy $45 billion.

The divestment proceeds resulted from the finalisation of the 49 per cent sale of equity in Petrojam Limited to Venezuelan oil company PDVSA. The sale was finalised in February, the finance ministry told the Financial Gleaner on Tuesday.

Those funds are expected to be retained by state-operated Petrojam and pumped into the ongoing US$500-million refinery upgrade to boost its refining capacity to 50,000 barrels of oil per day. The plant is also being re-engineered to process heavier, but cheaper crude.

Year to date, the finance ministry has surpassed its target on tax collections, although production/consumption and foreign trade taxes were $1.9 billion below expectations.

Overall, the $192.48 billion of taxes flowing to the treasury was $2.4 billion above target. Personal income and corporate taxes contributed $77 million to tax revenues, up five per cent year-on-year, suggesting that company payrolls had grown in the current 11-month period.

Government has also kept reins on its big-ticket expenses, debt-servicing costs and the wage bill; both with outturns that were minimally below projected spend. The two items were a lighter burden on the budget to date than last year, by two percentage points, but still accounted for 66 per cent of all spending - $79 billion for salaries and $95 billion of interest payments.

Derailed

Where the expenditure budget got seriously derailed was under government programmes for which spending rose $11 billion to $58 billion, and was only partially offset by the $4 billion cut in capital projects to $33 billion.

The latter strategy of reducing capital expenditure to contain government expenses has been criticised by analysts as an anti-growth measure, because of the limits it places on roads, bridge work and such projects, and the resulting impact on jobs and Jamaicans' ability to earn.

Government's largest tax collection in any one month was $21.8 billion in January.

The finance ministry has projected March taxes, the deadline for filing of income tax returns, at more than $27 billion.

business@gleanerjm.com