<p>Dear Editor,</p><p>Although we only have data for 7 months of the 2009/10 fiscal year, I would suggest with more than 99 per cent confidence, that the Government of Jamaica will not meet the full year target for the fiscal deficit. In fact, some observers believe that the fiscal deficit for the current year will be a whopping 11-13 per cent of GDP, or approximately twice what was originally projected.</p><p>A comparison of the actual performance with the economic and fiscal projections promulgated by the state and major political parties for the past 20 years, provides a bleak picture of the ability of those responsible to provide accurate forecasts for decision making. In almost every instance the out turn has deviated adversely from the corresponding projection by more than a reasonable margin of error. If the economic projections that are used to inform critical decisions are almost always wrong, is it surprising that the results achieved are worse than desired?</p><p>Writing in the Financial Times of December 8, 2009, the economist John Kay noted that entrepreneurs are expected to be overly optimistic in presenting forecasts to potential investors. In fact, such optimism is necessary as few persons will set up businesses without it. However, excessive optimism is not desirable for finance ministers nor the professionals who produce the financial projections for the Jamaican economy. Are these optimistic projections indicative of a more serious problem?</p><p>One watershed date in the politicisation of the civil service occurred circa 1975 when Mr "Ted" Ogilvie, the then permanent secretary in the Ministry of Construction, was murdered while opening the gate to his home. It is a stain on the investigative capabilities of our country that the perpetrators of this crime were never brought before the courts. Unfortunately for most of us, successive governments have continued the practice of making political appointments throughout the civil service hierarchy.</p><p>The persons who prepare the projections and reports for the Ministry of Finance and Planning are not primarily -- if at all --motivated by partisan loyalties. They are not dishonest and their documents do not contain falsehoods. But there is a strong perception that loyalty is more valued than competence. Paraphrasing John Kay again, advancement through the professional ranks of the civil service is better achieved by telling the politicians and senior <br>policymakers what they want to hear rather than being the bearer of unwelcome news.</p><p>The future by definition is uncertain, and making financial projections is difficult and dependent on many variables that create even more uncertainty, and thus a range of possible outcomes. However, the penchant of our civil servants and government officials to repeatedly choose among the most optimistic scenarios on which to base their decisions imposes costs that the country can no longer afford.</p><p>We cannot continue in this way without bearing even more enormous costs in the future. The minister of finance and planning will likely argue that the current fiscal deficit is largely a product of the global "credit crunch". This is a falsehood. Our grave fiscal problem is now structural and embedded and the product of, among other things, decades of actions based on unrealistic assumptions about the future.</p><p>Many persons have called for the <br>de-politicisation of the management of monetary policy by establishing a monetary policy committee. I support this idea but it does not go far enough. We need to take the politics and optimistic biases out of the preparation of all data on which the management of the economy depends. I suggest the establishment of an independent fiscal policy commission with responsibility for the preparation of all the projections of public finances. Such bodies exist in several other countries such as Canada, and the United States of America.</p><p>In the next few months and years, the Government of Jamaica will have to make some tough choices and decisions concerning public spending, taxes, and the future of many companies and agencies owned and operated by the state. These choices will inevitably be "political" as they will reflect the views of our elected leaders. We all accept that as a product of the rules of the political economy in which we live. However, we should reject the use of poorly constructed and biased data as the basis of decision making for the future of our country.</p><p></p><p>Sincerely,<br>Allan Lewis</p>