VZCZCXRO3554
RR RUEHGR
DE RUEHKG #0537 0761910
ZNR UUUUU ZZH
R 171910Z MAR 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 2443
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHSJ/AMEMBASSY SAN JOSE 1804
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS KINGSTON 000537 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/CAR (WBENT), WHA/EPSC (JSLATTERY) 
 
SANTO DOMINGO FOR FCS AND FAS 
 
TREASURY FOR L LAMONICA 
 
E.O. 12958:  NA 
TAGS: ECON EFIN JM
SUBJECT: FIRST SUPPLEMENTARY ESTIMATES FOR 2005/06 TABLED 
 
¶1.  The Government of Jamaica (GOJ) has announced its 
supplementary estimates for the 2005/06 fiscal year, which 
closes on 31 March.  The estimates, tabled in Parliament 
on March 7, will reduce the original expenditure budget 
for the full fiscal year by USD 13.5 million (JMD 0.9 
billion) to USD 5.3 billion (JMD 346.2 billion). 
According to the new estimates put forward by Minister of 
Finance and Planning Omar Davies, reductions in capital 
expenditure (down USD 47.7 million to USD 2.4 billion) 
will account for the downward adjustment in overall 
spending, as recurrent expenditure for the fiscal year is 
set to jump by USD 33.8 million to USD 2.9 billion. 
 
¶2.  The higher-than-programmed recurrent expenditure is 
required to cover increased salaries and traveling for 
public sector groups such as the police, nurses, teachers 
and the military (which, despite the memorandum of 
understanding, were granted a wage adjustment).  The 
Ministry of National Security, for example, was allocated 
an additional USD 9.6 million for officer salaries.  The 
Ministry of Local Government, Community Development and 
Sports had its recurrent budget increased by almost USD 22 
million to meet statutory deductions outstanding to the 
GOJ, provide garbage disposal services (JMD 157 million), 
clear outstanding advances from the post-hurricane period, 
and JMD 200 million for emergency road repairs.  The 
Ministry of Health will receive an additional USD 16.9 
million (JMD 1.1 billion) for salaries and services. 
 
¶3.  Chief among the areas to be hit by lower capital 
spending are education, information technology training, 
the Northern Jamaica Development Project, solid waste 
collection, and flood damage rehabilitation.  However, the 
cut in capital spending on education will be offset by a 
grant of USD 21.5 million from the cash-rich National 
Housing Trust (NHT) to finance an "education 
transformation fund."  The Ministry of Finance and 
Planning is expected to reduce its capital spending by USD 
46.2 million, reflecting the lower-than-projected 
depreciation in the foreign exchange rate and the 
resultant savings on external debt repayments.  A higher- 
than-expected reduction in domestic interest rates has 
also resulted in a decline in interest payments on the 
domestic debt. 
 
¶4.  Comment: Minister Davies had little choice but to 
attempt to reduce the deficit for the full fiscal year by 
cutting capital expenditure in this manner.  It is 
nevertheless another blow for a Ministry that began the 
year with high hopes for a balanced budget.  The cuts in 
capital spending on education infrastructure and 
information technology training, in particular, mean that 
the GOJ is being forced to trim expenditure on precisely 
the sectors that most commentators agree should be funded 
to the fullest extent possible if Jamaica is to dig out of 
its low growth doldrums.  With a general election (before 
the end of 2007) and the politically motivated spending 
that tends to accompany the same, a balanced budget would 
seem to remain but a distant dream.  End comment. 
 
JOHNSON