The Government will be entertaining several overseas experts on fiscal discipline next month as it consolidates efforts to establish a national fiscal council.

Minister of Finance and the Public Service Dr Nigel Clarke made the announcement yesterday morning at the Jamaica Pegasus hotel in New Kingston as he revealed plans by the Government to maintain fiscal responsibility after the end of Jamaica’s current agreement with the International Monetary Fund (IMF).

“Cabinet approved it in April, I am making a speech in May and the experts will be here in June to meet with all stakeholders, and we hope to incorporate the Jamaican experience into the design of our fiscal council,” he stated.

Although fiscal rules are not considered a panacea, as they cannot guarantee fiscal sustainability, they have become a popular mechanism to anchor fiscal policy, infuse fiscal discipline, and promote credibility.

Adoption of these rules, particularly among developing countries, has increased in recent years. However, only Jamaica and Grenada have legislated fiscal rules in the Caricom region, with Jamaica doing so in 2010 and 2014, followed by Grenada in January 2016.

Dr Clarke explained yesterday that fiscal councils are “permanent, independent, non-partisan institutions, staffed by competent, experienced and technically proficient persons that help promote economically sustainable fiscal policies across political cycles and are created by legislation”.

He noted that, since the global financial crisis of 2008/2009, fiscal councils have proliferated across the globe as countries have sought to implement measures to restore and sustain fiscal credibility.

Since introducing fiscal rules legislation Jamaica has been contemplating a fiscal council to provide oversight for the Government’s policies.

He said that the establishment of Jamaica’s first fiscal council, which can be construed as an enhancement of the partnership models already in place, offers several advantages, including:

* fostering greater transparency around fiscal policy, by having legislated access to economic data, having sufficient analytical capacity, and by providing unbiased information to the public;

* deepening democratic accountabilit, as policymakers have to maintain credible policies or explain what appear as deviations therefrom;

* altering the incentive/disincentive structure in the political economy by raising the political cost of unsound policies or policy proposals;

* reducing the political cost of complying with fiscal rules; and

* helping to keep the public and policymakers informed and educated and, by so doing, reduce “fiscal illusion”, where electorates and stakeholders wrongly believe that Government has more resources than it lets on.

He said that credible councils — as Jamaica aims to establish — are non-partisan in all their activities; not policy decision makers nor try to be; only offer a second opinion; not parallel opposition or parallel government; and influence public debate indirectly through the media impact of their reports, but are not otherwise direct participants.

“A Jamaican fiscal council would be the guardian, interpreter, and arbiter of Jamaica’s fiscal rules,” the minister added.

“Among other things, this framework promulgates the parameters of the budget calendar, provides for certain economic and fiscal reports and forecasts to be tabled in advance of the budget, and includes fiscal rules that establish prescriptive expenditure boundaries and escape clauses from those boundaries in the event of natural disasters,” Clarke said.

“Approached in this way, Jamaica’s independent fiscal council would embody the principles of credibility, accountability, transparency, inclusiveness, ownership, and permanence, which would help Jamaica maintain a path of fiscal prudence, enhancing our economic independence,” he stated.

He said it was important to note that common sense and the experience of other countries dictate that the establishment of a fiscal council requires, as a pre-requisite, or a parallel step, the strengthening of the macro-fiscal and public financial management capacities of the Ministry of Finance.

“This is an imperative. I will return to this topic at a future date,” he said.

Clarke also noted that in his first speech as a member of the Cabinet, at a Planning Institute of Jamaica/Inter-American Development Bank Labour Market Forum at the Terra Nova All-Suite Hotel in mid-April, he had raised the issue of a post-IMF Jamaican economy, ensuring full independence for the country.

“We have been here before. This time, however, the post-IMF era has to be positively different,” Clarke said then.

He also noted that his appointment as minister of finance came after five years of continuous and successful implementation of economic reform programmess with the IMF, across two political administrations, and 18 months before the likely beginning of yet another post-IMF era.

He noted yesterday that a variety of interests, with sometimes conflicting agendas, would seek to influence post-IMF policy — sectoral interests, labour interests, capital interests, generational interests, and even the media — which he characterised as normal.

However, he said that policymaking would require a balancing of these interests and, as efforts are made to balance interests, “there has to be an overarching vision that establishes priorities and frames decision-making”.

“For the Ministry of Finance, in an Andrew Holness Administration, the organising principles are the pursuit of economic independence, the expansion of economic opportunity for all; that is economic growth and the protection of the vulnerable,” he said.