Jamaica's Minister of Finance and the Public Service Dr Nigel Clarke making a presentation to Parliament. (Photo: JIS)

Jamaican Budget: $7-B contingency for COVID-19

Jamaica's Minister of Finance and the Public Service Dr Nigel Clarke making a presentation to Parliament. (Photo: JIS)

In addition to advancing JM$2 billion from the budget for fiscal year 2020/21 for coronavirus (COVID-19), Jamaica’s Minister of Finance and the Public Service Dr Nigel Clarke announced a JM$7-billion contingency fund to complement.

While making his budget presentation to Parliament in Kingston, the finance minister underscored that Jamaica will not be unscathed by the virus. In fact, Dr Clarke said, the country could be affected by weakened global impact, low oil prices and reduction in global growth, among others.

Gas flares burn from pipes aboard an offshore oil platform in the Persian Gulf’s Salman Oil Field, operated by the National Iranian Offshore Oil Co, near Lavan island, Iran, on Thursday, January 5, 2017. (Photo: Ali Mohammadi/Bloomberg)

“Policymakers around the world have been responding with monetary and fiscal stimuli inclusive of tax cuts [and] interest rates to counteract the effects…” Dr Clarke stated.

It is for this reason that he advised Jamaicans to counterbalance expectations of growth with the country’s “capacity to respond” to the outbreak of the virus. The minister added that growth could be subdued in the upcoming fiscal year or longer.

“Our first fiscal response was to provide an advance of JM$2 billion against the budget proposed for 2020/21 to accommodate and facilitate immediate preventative and preparatory spending as needed,” Clarke explained.

As such, the advance will go towards prevention, detection, control, treatment, and containment of COVID-19.

South Korean soldier wearing protective suits spray a street in the Gangnam district of Seoul, South Korea, on Thursday, March 5, 2020. South Korea’s government said it is seeking a 11.7 trillion won (US$9.8 billion) extra budget to help businesses hit by the world’s second-largest coronavirus outbreak, joining policymakers around the globe intensifying responses to the epidemic. (Photo: SeongJoon Cho/Bloomberg)

In particular, the funds will be used to “procure adequate medical and other supplies, to procure medical equipment, to improve the capacity of public health facilities across the island to handle caseloads… prepare facilities for quarantine” and train medical staff.

Another layer of security

Minister Clarke, however, outlined that the Government has since decided on a broader response to COVID-19.

“We want to build another layer to ensure that Jamaica’s [wellbeing] is preserved and sustained. Mr Speaker, the primary balance arising from the accelerated debt repayment will be used to finance a JM$7-billion COVID-19 contingency for 2021,” the minister of finance declared.

Clarke assured Parliament that as the word suggests, the fund will be “employed as necessary to protect the Jamaican people from health and economic impact” rather for “frivolous activities”.

Jamaica’s Minister of Finance and Planning Dr Nigel Clarke said the JM$7-billion contingency fund will not be used unnecessarily or for “frivolous activities”. (Photo: JIS)

Further, he said there is no commitment to use the fund.

“Effecting the use of this COVID-19 contingency will require a supplementary budget to be submitted to Parliament,” Clarke, however, pointed out.

“We hope that this situation will not deteriorate to the extent that the contingency will be required. However, if it does we are prepared; we are in a much stronger position today, Mr Speaker, to withstand global shocks than we have ever been before,” he added.