EDITORIAL - JLP must speak on fiscal rules

Given the recency of his return to the shadow Cabinet, Audley Shaw may not have had time to wrap his mind around the renewed discussion on legislated fiscal rules for Jamaica.

Yet, it is important that Mr Shaw, the Jamaica Labour Party's spokesman on finance, and his advisers, indicate their thinking on this issue now, with the prospect of influencing the Government's position, before the administration tables its bill on the matter.

In the meantime, Peter Phillips, the finance minister, owes it to Jamaicans to quickly publish the outlines of his plan - if the draft bill is not yet ready - to help inform what ought to be a serious debate. We would be disappointed if a bill were to be rushed through Parliament at the last minute.

Also, we suggest that Mr Shaw engage his new JLP colleague and recent Senate appointee, Nigel Clarke, who has recommended special parliamentary majorities - which would possibly require special constitutional arrangements - to amend the rules once passed. Dr Clarke's idea, however, is not dissimilar to the "super majority" for amendments proposed by Caribbean Policy Research Institute (CAPRI) in its recently released paper on the subject.

Putting in place additional, hard fiscal rules and adhering to them is among the so-called structural benchmarks Jamaica had to comply with under its economic reform agreement with the International Monetary Fund (IMF). And with good reason.

Our governments have not, for a long time, been disciplined in managing the country's financial affairs. Our policymakers are inclined, as one finance minister famously put it, to "run with it" when fiscal prudence would be a constraint to political gain. The upshot for Jamaica: a government debt of more than 140 per cent of gross domestic product, which we have difficulty servicing and which is a hindrance to productive investment, job creation, and economic growth.

The issue now is how to craft rules that sustain fiscal prudence, impose penalties on those who would "run with it" yet are not so inflexible as to render government incapable of responding in genuine crises. The voice of the Opposition is critical in this regard.

CAPRI, having reviewed a raft of arrangements in other countries, has offered a number of ideas for Jamaica, including that we use an "independent technocratic committee ... to oversee the creation, execution, and monitoring of the Budget, specifically the targeted aggregates".

Practical approach

Given the success, so far, of the public-private sector committee that monitors the IMF agreement, this suggestion is, on the face of it, attractive. That committee, though, was given previously agreed (between the Government and the IMF) benchmarks against which it monitors performance. The Economic Programme Oversight Committee's strength is the moral authority it brings to the table, and, if it comes to that, its ability to name and shame the Government for infractions.

With regard to CAPRI's fiscal committee, there are likely to be questions about the demarcation of its authority/power and that of the elected Government, and who, ultimately, would be accountable to voters for economic/fiscal policy. Of particular importance, perhaps, is clarification of the meaning of 'oversee', especially in relation to 'creation' of the Budget. CAPRI, we hope, will offer further particulars on this point, on which we also look forward to Mr Shaw's perspective.

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