An aerial view of New Kingston, Jamaica.

Jamaica generates surplus driven by tax revenues

An aerial view of New Kingston, Jamaica.

Central Government operations over the first nine months of the 2019/20 fiscal year (April to December) generated primary and fiscal surpluses of J$112.7 billion and just over J$24 billion, respectively.

Minister of Finance and the Public Service, Nigel Clarke

This is according to the Government’s 2020/21 Fiscal Policy Paper, which was tabled in the House of Representatives on February 11 by Minister of Finance and the Public Service, Nigel Clarke.

The document indicates that the out-turn for the primary surplus, which stands at 6.5 per cent of budget, exceeded the nearly $94-billion programmed target, while the fiscal surplus was more than $21 billion better than the projected $2 billion.

Both out-turns reflect the strong overall combined performance of revenues and grants, up by more than $14.6 billion, which exceeded the budgeted target, coupled with lower than programmed government expenditure, net of amortisation, which was down $12.01 billion.

The surpluses were achieved primarily through increased tax revenues.

According to the Policy Paper, the main driver behind the revenue buoyancy was tax revenues, up $10.9 billion.

Receipts for April to December 2019 totalled $414.7 billion, some 2.7 per cent over budget and 6.7 per cent more than the corresponding period last year.

The document also cites prudent fiscal and monetary policy reforms among the factors contributing to fiscal surplus out-turns over the last three years, which concomitantly reduced Central Government’s borrowing needs.

The policy paper said fiscal and monetary policy reforms also contributed to the surpluses.

Between April and December 2019, loan receipts totalled $84.4 billion. This was $4.13 billion or 5.1 per cent lower than budget and 15.7 per cent lower than the corresponding period the previous year.

Domestic loan receipts, which accounted for 62.1 per cent of the total loan inflows, were $52.46 billion or six per cent lower than budget.

The Policy Paper indicates that the reduced inflows stemmed from lower than budgeted amortisation, coupled with the improved fiscal balance.

Amortisation payments, totalling $148.34 billion, surpassed the budgeted target by $30.29 billion or 25.5 per cent and were 28 per cent higher than the previous fiscal year, as greater external outlays outweighed reduced domestic payments.

The latter resulted from the non-execution of programmed liability management options during the period, while the buy-back of global bonds in September 2019 was the principal driver of the increased external payments.

Total net financing outflows totalled $64.8 billion, of which the domestic portfolio accounted for $12.8 billion and the external component, $51.9 billion.