Reduced Social Spending will contain expenditure

• The government will likely contain current expenditures in FY2022/23 as it reduces outlays on social spending. On March 8, the Minister of Finance, Dr. Nigel Clarke, introduced a JMD912.0Bn budget for FY2022/23, which Fitch expects will pass in late March or early April as the government holds a legislative majority. 
• It is expected that the final budget will limit social spending and cash transfer programmes enacted during the COVID-19 pandemic, reducing current expenditure to 25.2% of GDP, from an estimated 26.1% in FY2021/22. 
• That said, the final budget will likely increase public sector wages and capital expenditures for the coming quarters. Clark announced a reform, which will go into effect on April 1 that will raise public wage and employee compensation spending to 11.7% of GDP in FY2022/23, from 10.8% in FY2021/22. 
• The government will also lift capital expenditures by 14.0% in FY2022/23, from an estimated 12.0% increase in FY2021/22, as the administration increases funding for infrastructure projects, particularly upgrades to roads, bridges and public transit that began in 2021, after public capital expenditure fell by 30.1% in FY2020/21.

(Source: Fitch Solutions)