JAMAICA | JUTC Fare Reduction Won't impact Inflation says Julian Robinson

KINGSTON, Jamaica. February 22, 2024: Shadow Minister of Finance and the Public Service, Mr. Julian Robinson, says Finance Minister, Nigel Clarke's attempts to fix breaches of the inflation target by a reduction in Jamaica Urban Transit Company (JUTC) fares, was a bad policy decision from the day it was announced.

Mr. Robinson says, “the PNP is hardly surprised at yesterday’s admission by the Governor of the Bank of Jamaica, Richard Byles, that the fare reduction is less likely to have any major effect on inflation in the local economy than originally thought. Mr. Byles said, “upon review, the bank now recognised that it had overestimated the impact of the reduction as the two-phased reduction will have an offsetting impact of only 0.2 percent.

Commenting on the BOJ Governor's remarks, Robinson said the Opposition had pointed out from the outset that the fare reduction would have minimal impact on inflation since JUTC was serving only 30% of commuters in the Kingston Metropolitan Transport Region (KMTR) and commuters in the other parishes would have to continue paying the higher rates, which are set to go up again on April 1, 2024.

Robinson called the government’s decision “raw politics, which had only served to worsen the financial misery of the JUTC without delivering a benefit to overburdened taxpayers or commuters, and partially explains why the company is projecting to lose $16 billion this financial year.”

The Shadow Minister, it was not comforting to say, “I told you so”, as this policy error will cost taxpayers and have negative consequences for the 2024/25 fiscal budget. He said it was the people of Jamaica who would pay for a political expedition which was doomed to fail.

In the meantime, the government says it remains committed to its Jamaica Urban Transit Company (JUTC) fare reduction policy.

Finance Minister Dr. Nigel Clarke says the government is pleased that tens of thousands of Jamaicans who rely on the JUTC are benefitting from the reduction, despite an admission by the Bank of Jamaica that the lowering of fares by bus the company would not have the desired effect on tempering inflation.

However, the opposition spokesman reiterated that it must have been apparent that JUTC, which only supply a very small percentage of the travelling public, and only in the Kingston Metropolitan Area, could not have such a significant impact on inflation."

Robinson said there are other options the Finance Minister could explore in seeking to cushion the effects of inflation. "For example, the hedge tax is something that is available to the Minister that he could look at if he wants to cushion the crisis and other things," he proposed. 

Robinson concluded that the government's decision has caused a further worsening of the financial status of the JUTC which is projected to lose $16 billion this financial year.

-30-