Stimulus package to increase deficit

New research is indicating that the fiscal deficit will increase in the new financial year because of the Government’s recent stimulus package.



This means that Jamaica will have to borrow more money or seek more grants in order to meet the obligations in the next budget.



The Caribbean Policy Research Institute (CaPRI), made the revelation this morning while addressing the Private Sector Organisation of Jamaica.



Late last year, Prime Minister Bruce Golding announced a multi-million dollar stimulus package.



It was aimed at providing relief for ordinary Jamaicans and businesses that were wilting under the pressure of the global crisis.



The package covered 15 initiatives.



In its latest research CaPRI has analysed the impact of six of these initiatives on the economy over a one-year period.



It has found that the Government will be foregoing $4.6 billion because of the structural changes it made to custom user fees, tourism marketing, the GCT, Income tax, dividend tax and the GCT on tourism.



Earlier,CaPRI had said the Government would forego $2.2 billion, but it has since revised the amount.



According to CaPRI, this means that the Government will incur an additional deficit of 0.59 percent of the Gross Domestic Product.



Senior Researcher at CAPRI, Latoya Richards says the stimulus money could have been used on other initiatives like education, crime fighting and skills training.



The research institute has not yet examined the likely impact if the government had chosen to spend the stimulus money otherwise.



Have Your Say at www.gleanerblogs.com