Clarke expects impact from Russia-ukraine conflict but...
MINISTER of Finance and the Public Service Dr Nigel Clarke says that while the situation unfolding in Ukraine is likely to impact commodity prices worldwide, the Government expects them to retreat at some point during the year.
“The price that matters from a budgetary point of view is the average price that obtains throughout the year, and not a peak price. So, with respect to last year, after all is said and done after all that has happened with oil prices, Jamaica ended up with a very positive balance of payment result,” Dr Clarke noted.
He was answering questions from the Opposition’s spokesman on finance Julian Robinson, who noted that the previous budget was projected on US$45 per barrel of oil, but which ended the year at US$73 per barrel, and further projected a US$67.5 per barrel for the coming fiscal year, with the price already at US$95 per barrel with “a fair bit of volatility” given the issues in Ukraine.
But Dr Clarke noted that, despite elevated oil prices throughout the last fiscal year and though average oil prices were elevated in comparison to what the average was assumed to be, the country still ended up with a positive current account and a very healthy balance of payment position.
He said that the budget projections were based on the average oil prices over the 12 months of the year, and were informed, not simply by what the Government believed would happen, but by taking data information from public sources that it has relied on for a long period of time.
“... Obviously there will be a differential between [the average prices and the peak prices], and we do believe that it is possible that the average price for the year could be higher than the average price that is assumed here,” the minister stated.
“Now clearly there is a situation that is unfolding in the Ukraine that will impact the world economy and will likely have an impact on Jamaica, and that impact is likely to be through three channels, one of which is the channel of commodity prices, where we can expect oil prices to rise in the short term, even though we expect at some point during the year for there to be some retreat in those prices,” Clarke said.