(Jamaica Gleaner) Finance Minister Dr Peter Phillips has signalled his intention to swing a J$21.6-billion axe into the national Budget.
By way of a second supplementary estimates of expenditure tabled in the House of Representatives yesterday, Phillips is proposing a J$12.5 billion cut in capital projects.
The minister is also proposing to cut recurrent expenditure by J$9.8 billion. The proposed new budget is J$525.2 billion.
But economist Ralston Hyman has blasted the Government for the revised budget saying it will have dire consequences for the country.
“Budget cuts in a recession is going to have a negative impact on the economy because the economy is already functioning below capacity and the Government is a major player in the economy,” Hyman posited.
He argued that, with Government spending being approximately 40 per cent of GDP, a dramatic cut in expenditure, particularly capital projects, will be deleterious. He said unless the Government is able to mobilise private sector and foreign investment, the economy will continue to perform below capacity.
“The level of poverty, unemployment and frustration will also increase,” Hyman argued.
“It is a very bad move and it is going to have political consequences,” he added.
Increase approved Aug
Parliament in August had approved an increase of J$2 billion in the national Budget, taking it to J$546.8 billion for the fiscal year, up from the J$544.7 billion which was approved in April.
Faced with growing socio-economic discontent of the people, the then governing Jamaica Labour Party (JLP) called early elections and was booted out of power last December.
Portia Simpson Miller’s People’s National Party (PNP), which promised Jamaicans a better life, won the election by a landslide, with Simpson Miller making Phillips her finance minister.
Phillips has said the administration inherited an economic programme that went disastrously off-track in the second quarter of the fiscal year.
“As a consequence, there is now a fiscal gap of some J$10 billion for the current fiscal year and the Cabinet has agreed to measures and adjustments which will be reflected in the Supplementary Budget that I will be tabling in Parliament later this month,” Phillips had said.