Estimates at a glance

R. Anne Shirley, Contributor

The Government of Jamaica tabled an expenditure Budget of $544.721 billion in the House of Representatives yesterday. This Budget reflects above-the-line expenditure of $397.35 billion and amortisation payments of $132.259 billion. As in previous years, debt servicing accounts for the largest portion of the Budget. In the upcoming Budget, debt servicing accounts for 48 per cent as compared with 46 per cent in financial year 2010-2011 - an increase of just under two per cent.

Amortisation

Although there has been an overall reduction in the budgeted repayment of internal loans, nevertheless the estimates for the financial year 2011-2012 includes:

Provision of $617.35 million to cover the repayment of loans raised from local commercial banks to finance (a) Sugar Company of Jamaica (SCJ) debt assumed by the Government of Jamaica, and (b) the acquisition of motor vehicles for the police.

A further $5.727 billion to meet principal repayments arising out of the invocation of government guarantees on internal debt.

And $218.6 million to cover the repayment of promissory notes issued to and loans raised from parastatal bodies including (a) payment to the National Housing Trust re Stadium and Jamaica Defence Force housing; payment to the PetroCaribe Fund and Development Bank of Jamaica for debt assumed on behalf of SCJ, (c) debt owed to PetroCaribe Fund by Air Jamaica and (d) reimbursement of taxes withheld on loan payments due to the National Insurance Fund (NIF) and other NIF investments.

On the external-debt repayment side, there are two interesting contingent payments:

One allocation covers a contingency of $3.319 billion for the repayment of guaranteed loans, and

"The other is a contingency of $6.521.25 billion for the "execution of a liability management exercise".

There is also a provision of $675.57 million to cover the repayment of loans re agricultural commodities such as rice, wheat, flour and corn for the Government's nutrition programme. This is a reduction of $67 million as compared with the allocation in financial year 2010-2011 - and this despite the continuing rise in global food prices.

And there is an allocation of $704.96 million to cover repayment of suppliers' credit, including buses and other equipment as well as the repayment of loans to Glencore.

In the provisions for interest payments, $5.217 billion has been set aside to pay interest charges on fixed rate US$750-million bond issued by the GOJ on the international capital markets in June 2008 for an amount of US$350 million and reopened for an issuance of an additional amount of US$400 million in February 2011 which is due to mature in 2019.

Table 1 - Debt-servicing provisions