Fact checking Mark Golding and Fayval Williams. How much would the PNP’s plans really cost the country?
Jamaica’s budget debates 2025 just wrapped up, and there’s a lot of controversy around the cost of the Opposition PNP’s plans.
So who’s right? Would the PNP run a 204 billion dollar deficit, leading to Finsac 2-point-0 like Fayval claims? Or would the PNP’s plans only cost around 34 billion like Mark says?
Those two numbers are miles apart, but lucky for you, you have me to run the numbers.
So first of all, how does Fayval get all the way to a 204 billion deficit? This is the table she presented to Parliament, comparing the JLP government’s budget to a potential PNP budget. And you can see the 204 billion deficit right there versus a surplus of 780 million dollars for the government.
Here’s the PNP’s costing according to Fayval. First of all, she’s assuming that the PNP would give up 139 billion dollars in non-tax revenue. This includes 11.4 billion taken from NHT, which the PNP said they would put back, and 128 billion from securitization.
Mark had strongly criticized the government for this securitization programme. In his budget speech on March 18, he said it was essentially the government selling off the country’s future revenues.
However, in a point of order during Fayval’s speech on March 25, he clarified that henever said that securitization was in itself wrong and that the use of the proceeds to fund the current budget is what is wrong
Well that’s the same thing he said before. And that does imply that the PNP would not be using securitization to fund their budget. So point for Fayval. Deduct the full 139.8 billion from the PNP’s column.
Before I move on though, let me clarify something, because this is the major reason the PNP’s budget would go so far over. The line item for 139.8 billion in the budget is simply described as non-tax revenue. There is no breakdown of what comprises that non-tax revenue. We know 11.4 billion comes from NHT, and Mark did seek clarity as to what comprises the rest.
He shared a response to his query from the Ministry of Finance with us via what’s app. The response said, “The major sources are the National Housing Trust and the monetization of contractual cash flows.” However, there’s no additional breakdown. Money Media also sent a request for this information to the Ministry, but we haven’t received a response yet as I record this.
In Fayval’s rebuttal, she credited the entire balance to securitization. Without further information, I have to assume she is accurately representing this.
The next point was on the tax give-backs. Based on Fayval’s calculations, the PNP would be giving up 25.5 billion dollars in taxes. This includes 8 billion in asset taxes, 11 billion by giving MSMEs a three year break on corporate income tax, 2.5 billion from the food import tax, and over 3 billion from the employer tax credit.
However, Mark’s numbers here are vastly different. He pointed out they would phase in the asset tax rollback over five years, so that would only cost 2 billion in year one. Point for Mark.
He claimed the MSME corporate tax break would only cost 1 billion, not 11 billion. I assume Fayval’s number is if this tax break applied to all MSMEs, but the PNP has clarified that it’s only for new MSMEs. So point for Mark.
Mark agreed with Fayval they would be giving up 2.5 billion from the food import tax, so point for Fayval.
Finally on taxes, he didn’t specify an impact from the employer tax credit which Fayval listed at 3 billion. He also didn’t contest the cost of removing taxes from laptops and tablets for education at 350 million, so I’ll give those points to Fayval. That brings us to a total of 8.85 billion in tax give backs by the PNP.
The last section is on the cost of the PNP’s promises. Fayval claims it will cost 48.8 billion. Mark puts it at half that, 23 billion. Here is the list of promises. Mark didn’t contest the cost of raising school standards, funding for special needs, matching companies’ investment in their workers, or providing student meals, so I’ll give those points to Fayval.
The major contention, however, is in the cost of the PNP’s one degree per household policy. Fayval put it at a whopping 31.5 billion. But Opposition Spokesman on Education, Damion Crawford, later clarified at a press conference, that this programme would only be for families that don’t already have a university degree. He said about 6000 students would benefit in the first year, bringing the cost to 3.9 billion.
The electricity regularization programme would also only be 1 billion instead of 2 because the government has already allocated a billion.
This brings the cost of the PNP’s promises to about 22 billion dollars.
Let’s add that all up: Giving up non-tax revenue would cost 140 billion. Giving up certain taxes would cost 8.8 billion. And increasing social spending would cost 22 billion. For a total of about 170 billion.
Now that’s less than Fayval’s tally of 214 billion, but not by that much. This is largely because of the impact of not using money from the securitization programme to fund the budget, which the PNP may want to clarify their position on.
So would this bankrupt the country or lead to FINSAC 2.0, like Fayval claimed?
Well, according to this document from the Ministry of Finance, the government spent about 79 billion dollars on FINSAC up to 1998. The exchange rate in 1998 was $36 to $1 US. Today it’s approximately $160 to $1. So $79 billion in 1998 is equivalent to $351 billion today, and that’s only accounting for devaluation. I haven’t factored in inflation.
By that basic, but admittedly imperfect calculation, the cost of the PNP’s programmes would be roughly half of what FINSAC cost Jamaica.
However, this is also not the full story.
The PNP has indicated that they would use the portion of the budget allocated to “discretionary spending” to fund their plans. This means they would reallocate funds from some current programmes. They’re also counting on economic growth and higher tax revenues to make up some of the funding.
I think these two measures may be able to cover the PNPs tax givebacks and social spending, which amount to about 30.9 billion.
But the most expensive issue is still covering that income from securitization. 140 billion is a lot of money. And this is the second year the government is using this as a source of funding. So what exactly is securitization and why is it so controversial?
According to Investopedia, securitization is the practice of pooling assets that you wouldn’t usually be able to trade easily, such as mortgages. Typically you don’t buy and sell mortgages on the open market. It then repackages those assets into a tradeable security that bears interest.
In the government’s case, they’re packaging some of their receivables and selling them off. Receivables are money that is owed to you. When you sell your receivables, the buyer gives you money now and then collects what is owed to you later. So let’s say someone owes you $100, but it’s not due for payment until 6 months or a year from now. A buyer might offer you $80. That way you get to collect most of the money upfront rather than having to wait several months. Then the buyer collects the full $100 from the person who owes you, when it becomes due.
In this case, the government is securitizing some of its future tax revenues. We all know the government is going to collect taxes. So for an investor, it’s a pretty safe bet to buy the government’s future taxes.
But the PNP is opposed to the government selling these future taxes, which raises a serious issue. Because if the government doesn’t do it, they’ll be left with a 139 billion dollar hole in the budget, that they’d probably have to borrow. But if they do, they’re taking future revenues to run the country now. Presumably, they’re assuming that in the future, revenue will increase enough that it won’t really matter.
So, to securitize or not to securitize? That is the question!
And that’s the bottom line.