Why is the government cutting spending when we need more?
So Finance Minister Fayval Williams recently tabled a 1-point-3 trillion dollar budget for the 2025/26 financial year, which starts in April.
That’s 9 percent less than it spent the year before. And if you factor in inflation, it’s actually 14% less!
But don’t we need more? More resources, more pay, more spending on roads and schools! And aren’t we doing better now? So can’t we afford to spend more?
The answer is yes and yes!
The smaller budget is actually because the government will be spending substantially less on debt repayments this year.
By the end of March, debt to GDP will be less than 70%, the lowest it's been in thirty years, and among the lowest in the Caribbean. Twelve years ago, debt to GDP was almost 150%!
Debt servicing this year is down to 340 billion dollars, or about 29 percent of the budget. Twelve years ago, debt servicing literally took up half of the budget! Even up to last year, Jamaica spent almost half-a-trillion dollars paying back debt. 491 billion to be exact.
And because we’re spending less on debt, that gives the government more room to spend on other things. They’re planning to spend 857 billion on things other than debt this year.
Last year, they spent 850 billion on other things. So even though this year’s budget is smaller, they’re spending 7 billion more on salaries, roads, schools, and stuff the country needs.
And that’s the bottom line.
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