[Jamaica Observer] – A day after Prime Minister Andrew Holness promised an economic response to the outbreak of the novel coronavirus disease (COVID-19), the Government yesterday outlined a $25-billion fiscal stimulus package to cushion the impact of the virus on businesses and workers.
Describing it as “the largest fiscal stimulus in Jamaica’s history” Finance Minister Dr Nigel Clarke told the House of Representatives “pumping $25 billion into the economy at a time of uncertainty like this helps to support economic activity” in the country.
The banking sector, he said, has volunteered to forgo the reduction of the asset tax that he had outlined in his budget presentation last week for one year, thereby adding $3 billion to the $7-billion COVID-19 contingency he announced in his speech. That brings to $10 billion the total in the COVID-19 fiscal contingency.
Reiterating his view that the asset tax is a tax on consumers and not good for monetary transmission, Dr Clarke said “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 measures being implemented by the Government, he said, include:
The Special Consumption Tax on approximately 100,000 litres of alcohol for use in making (or substituting for) sanitisers that will be donated to the National Health Fund and Ministry of Health is being waived. This will ensure that sanitisers remain available in Jamaica.
“We will also waive Customs duty on the importation of masks, gloves, hand sanitisers, and liquid hand soap for a 90-day period,” he said.
Additionally, he said under normal circumstances, Customs requires business process outsourcing firms to keep the equipment used in their operations at their place of business. “We will waive this requirement for a specific period to facilitate working from home and for business continuity,” the finance minister said.
“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.”
He also introduced what he termed the Covid Allocation of Resources for Employees (CARE) programme which has four elements:
a.) 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;
b.) 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-19 case in Jamaica] due to the COVID-19 virus. This will be available for a specific period;
c.) Special soft loan fund to assist individuals and businesses that have been hard hit; and
d.) Supporting the poor and vulnerable with special COVID-related grants.
“We are finalising 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,” Clarke said.
Noting that an adverse economic impact from COVID-19 is unavoidable, the minister expanded that “The fiscal stimulus measures will give us the best opportunity for our eventual economic recovery.”
Meanwhile, he urged legislators to cooperate with the Administration to pass a third supplementary budget for the financial year 2019/20, as the Government will need to make budgetary reallocations in a manner that reflects its response to the COVID-19 outbreak and direct available and unutilised amounts to the contingencies fund for use.
“This will better prepare Jamaica to weather the economic effect of COVID-19 in 2020/21,” he said.
“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,” he said. “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.”