The unprecedented spread of COVID-19 has created a global health crisis. Each day brings new developments as countries around the world seek to "flatten the curve" and achieve "social distance" which is significantly, sharply and suddenly curtailing economic activity around the world.
The Jamaican government, led by the Most Hon. Prime Minister Andrew Holness, has taken strong action to protect the Jamaican population.
In economic terms, the COVID crisis will certainly have adverse economic implications for the world and for Jamaica.
The good news, however, is that the Government of Jamaica is providing a $25 billion stimulus, the largest fiscal stimulus in Jamaica's history, that could not come at a better time.
Pumping $25 billion into the economy at a time of uncertainty like this helps to support economic activity in Jamaica.
This is always desirable when the global environment weakens.
The reduction in GCT from 16.5% to 15% puts $14 billion back in the hands of consumers and supports consumption. The $1 billion MSME tax credit provides critical cash-flow support to MSME's and the dramatic reduction in regulatory fees for coconut, coffee, cocoa and spice farmers incentivizes greater production.
In this time of need for the country, it is also important that Jamaicans support our domestic economy by buying Jamaican. This would enhance the effect of these measures even further by supporting domestic production and domestic economic activity.
This is a time that Jamaicans are coming together to help each other, a time of shared sacrifice for the benefit of all Jamaicans.
The Banking sector has volunteered to forgo the reduction of the asset tax that I announced earlier, for one year, which adds $3 billion to the $7 billion Covid Contingency I announced in my budget presentation bringing our total Covid Fiscal Contingency to $10 billion.
The asset tax is a tax on consumers and not good for monetary transmission. However given the impact of the measures taken to protect the health of the Jamaican people we will be accelerating the intervention and deploying it directly to those who need it most.
The Fiscal Contingency is just that. It is a contingency and not a commitment to spend.
The Government is implementing and considering further fiscal action to cushion the economic impact of COVID-19. These include:
- We have waived the Special Consumption Tax on approximately 100,000 liters of alcohol for use in making (or substituting for) sanitizers that will be donated to the National Health Fund and Ministry of Health. This will ensure that sanitizers remain available in Jamaica.
- We will also waive Customs Duty on the importation of masks, gloves, hand sanitizers and liquid hand soap for a 90 day period.
- Under normal circumstances, Customs requires BPO firms to keep the equipment used in their operations physically at their place of business. We will waive this requirement for a specific period to facilitate working from home and for business continuity.
- We are in discussions with commercial banks for them to provide temporary cash-flow support to businesses and consumers in affected sectors through deferral of principal payments, new lines of credit and other measures
- We will introduce the Covid Allocation of Resources for Employees (CARE) programme which has four elements
- Business Employee Support and Transfer of Cash (BEST Cash) – which will provide temporary cash transfer to businesses in targeted sectors based on the number of workers they keep employed
- Supporting Employees with Transfer of Cash (SET Cash ) – which will provide temporary cash transfer to individuals where it can be verified that they lost their employment since March 10, (the date of the first Covid case in Jamaica) due to the Covid virus and this will be available for a specific period
- Special soft loan fund to assist individuals and businesses that have been hard hit
- Supporting the poor and vulnerable with special Covid related grants.
We are finalizing details on the implementation, and accountability mechanisms for these programmes, which will be announced shortly. These measures will be implemented transparently with broad stakeholder involvement.
An adverse economic impact from COVID-19 is unavoidable. However, the Government will implement a range of economic policy tools, to help cushion against the effects. Working together, supporting each other, Jamaica will overcome this. These fiscal stimulus measures will give us the best opportunity for our eventual economic recovery.
Third Supplementary 2019/20 and First Supplementary 2020/21
We will need to table and have passed before the end of this financial year a third supplementary for 2019/20.
The severe disruption caused by COVID-19 globally has escalated daily over the past week, and resulted in increasingly stringent measures taken locally to safeguard the Jamaican population. With measures announced yesterday, and late last week, we will need to make budgetary re-allocations in a manner that reflects our response to date and directs available unutilized amounts to the Contingencies Fund for use during FY 2020/21. This will better prepare Jamaica to weather the economic effect of COVID-19 in 2020/21.
I am requesting the forbearance of my parliamentary colleagues on the PAAC, in the Standing Finance Committee and the House of Representatives to work with us to expedite the passage of the third supplementary 2019/20 before the end of the fiscal year along with passage of the Appropriation Bill for 2020/21. This will require tabling the third supplementary estimates on Tuesday, March 24, 2020 and on the following day having PAAC, Standing Finance Committee and debate and passage of the Estimates.
Very, very, early in the new financial year, we will table the first supplementary estimates for 2020/21 that will be geared specifically towards accommodating the expenditure side of the fiscal stimulus.
We would like to get these funds out early and so again I will be requesting the forbearance of parliamentary colleagues for a swift process that is responsive to the circumstances.
Working together, Jamaica will recover from the effect of COVID-19.