PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

4.10.2. However, the extent of the increase in poverty was cushioned by:
Welfare expenditure: increase in resources allocated to welfare expenditure in
the FY2010/11 budget
Remittance Inflows: increase in remittance inflows by 8.7% to US$928.2 million
in January – June 2010 relative to the corresponding period in 2009.
5.0 Fiscal Considerations
5.1 The implementation of the Fiscal Consolidation Programme requires a cut in
public sector wages and salaries from 11.75% to 9.5% of GDP over a four- year period.
This would lead to i) a further reduction in purchasing power; ii) reduction in demand for
goods and service, thus leading to a further contraction in output; and iii) a decline in the
short-term economic outlook. In the current economic climate, these negative effects
may lead to a slowing of the recovery or a double dip recession.
5.2 Subsequent to the two IMF Reviews, the IMF has highlighted that there are
possible threats to the programme including the May 2010 incident, which although
stabilized and having no impact on the financial sector, could affect economic prospects
through tourism and negative investor sentiment.
6.0 Conclusion
6.1 Given recent socio-economic developments and trends outlined above, the
following implications are foreseen:
further contractions in output, stalling the projected recovery process in 2010 and
2011
halting the positive recovery trends in employment levels
further declines in consumer and business confidence.
6.2.1 Therefore, the PIOJ recommends the following:
1. Implementation of specific growth-inducement projects to generate employment
and spur demand, thereby building consumer and business confidence.
2. Use of on-going projects for which loan/grant funding has already been procured
and budgetary provision has already been made or will be made, to generate
liquidity in targeted communities.
The Chinese funded infrastructure rehabilitation programme could be one
such initiative to provide jobs, linked with training for community
residents. Other programmes planned by the National Works Agency and
National Water Commission could also be identified to link the objective
of infrastructural improvement with that of job provision.
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