Editorial | Some tweaks for Fiscal Commission

As a long, consistent, and aggressive campaigner for independent oversight of Jamaica’s fiscal ecosystem, this newspaper welcomes Finance Minister Nigel Clarke’s tabling last week of a bill to establish a parliamentary commission, which is to fulfil that role. We have two regrets. One is that the legislation took so long to come. The other is that the delay might mean that the law misses the robust scrutiny to identify its kinks.

With respect to the latter, we hope that that doesn’t happen. Minister Clarke must allow reasonable, though not overlong, time for public comment on the bill. We, on a cursory reading, have a few.

First, though, the importance of this move isn’t to be underestimated. Over the past eight years, Jamaica has made great strides, partly because of the demands of the International Monetary Fund (IMF) in reforming its economy and putting its fiscal house in order. The country’s debt, at the start of the process, was barrelling towards 150 per cent of gross domestic product (GDP). Though on a slight uptick because of the crisis, before the economy was upended by the COVID-19 pandemic, it was down to 94 per cent of GDP. Over the reform period, the ballooning current-account deficit had fallen to single digits, and though growth remained slow, unemployment fell significantly and business confidence was high.

Central to these achievements was that across administrations, the Government ran high primary balances, aggressively paid down the debt, and maintained fiscal discipline. Having the demands of an IMF helped. More important, however, was the moral authority of, and the confidence inspired by, the Economic Programme Oversight Committee (EPOC), the independent private-public civil-society body that refereed the Government’s performance against IMF targets.

SHED MUCH OF ITS AURA

Jamaica is no longer under an IMF programme. The Government, however, kept EPOC. The committee, though, has shed much of its aura, and, seemingly, its great sense of mission. Part of the issue, of course, is that EPOC is not fit-for-purpose for the new circumstances – tracking, on an ongoing basis, the Government’s compliance with the fiscal accountability rules. It has no staff of its own. Its leadership is a voluntary, part-time exercise. The proposed fiscal commission, which will join an expanding list of independent fiscal institutions – including two in Caribbean Community (CARICOM) member countries, The Bahamas and Grenada – is supposed to overcome those shortcomings.

At least twice each year, the commission will be required to present to Parliament, and publish on its official website, an assessment of the Government’s economic and fiscal policies as well as a statement of its fiscal performance.

With respect to the former, it will assess the viability of the Government’s macroeconomic forecasts and evaluate whether the policies are consistent with the fiscal rules laid out in the Financial Administration and Audit Act – a task previously undertaken by the auditor general, for which, as we have said before, that office was not designed and is totally unsuited. These reports are to be published within 10 days of the tabling of the finance minister’s fiscal policy paper in Parliament. The review of the budget and other fiscal targets are to be published within 21 days of the commission’s receipt of data for the quarter ending June 31 and 42 days for the quarter ending December 31.

These, on the face of it, appear to be reasonable timetables. However, we would have preferred if there was an explicit period stated in a law, except in established instances of force majeure, for the finance ministry to hand over data to the commission. The commission should also be specifically empowered to inform the public about inordinate delays in either receiving data to complete its analyses, or in the finance minister delivering his fiscal policy paper, or its tabling in Parliament. Further, with respect to reports submitted to Parliament by the commission, it should, for the sake of transparency, be allowed to publish those reports if they are not tabled in the legislature within, say, 45 days.

We appreciate the need for the commission, in fact and appearance, to be non-partisan. Nonetheless, it would make sense if its independent assessments and analyses were available to Parliament’s oversight committees, especially the Public Administration and Appropriations Committee, whose job includes reviewing the fiscal behaviour of ministries, agencies, and departments during the fiscal year.