CALVIN McDonald the quiet but illustrious chief fiscal advisor to our Ministry of Finance speaks exclusively to the Jamaica Chamber of Commerce this week.

McDonald, a Jamaican, is the hitherto almost unheard from chief fiscal advisor to Minister of Finance Dr Nigel Clarke.

McDonald is an experienced economist, with bachelors and master’s degrees from the University of the West Indies (UWI), who did doctoral studies at New York University. He has been a lecturer in economics at UWI, and taught economics at the State University of New York and Iona College.

He is currently nearing the end of a six-month period of “unpaid” leave (which began last November) from the International Monetary Fund (IMF), to where he will return to his position of deputy secretary.

McDonald was appointed deputy secretary of the IMF in 2012, where he helps shape the work programme of the institution, and supports the managing director and her deputy managing directors chair IMF Executive Board meetings.

Deputy secretary is a very important position at the IMF, similar but different from the position of corporate secretary in a company. Whilst also concerned with issues of governance, unlike a company where the typical corporate secretary is a lawyer, all holders of this position at the IMF are usually economists, as their key task is to review the work programme of the fund against the interests of its shareholders (countries and their governments) when they set the board agenda.

The IMF is traditionally always headed by a European, currently Christine Lagarde, with the first deputy managing director always an American, who now always has reporting to him a Chinese deputy, as well as a Japanese, with the final remaining deputy chosen on a rotating basis from the other developing countries.

For more than 26 years McDonald has worked as a staff economist at the IMF, and, along with only two other Jamaicans, has attained their highest levels of seniority, having been involved in some of the IMF’s most important initiatives, including debt restructuring, debt relief and debt write-offs.

For example, between 1998 and 2000, he served as fiscal economist on the Russia team during their severe currency crisis and unilateral domestic debt default, and he helped design the IMF’s last financial support programme for that country.

A large portion of Russia’s domestic debt (GKO’s or Russian T Bills) were owned by foreigners, and McDonald interacted with the then Russian Finance Minister Livshits, amongst others. Former Minister Livshits himself came to Jamaica in late 2009 at the invitation of the Jamaica Chamber of Commerce to speak on the issue of debt. In that capacity, McDonald worked closely with “star” MIT economist Stanley Fischer, then deputy managing director in charge of Russia, who went on to become IMF chief economist, the head of the Bank of Israel and deputy head of the US Federal Reserve before again retiring.

McDonald has also been on the front line of debt relief and write off initiatives.

In 1997, he was the desk economist for Uganda when that country became the first country to receive multilateral debt relief under the Heavily Indebted Poor Country Initiative. He was deputy mission chief for Nigeria, and contributed to the economic programme in 2005 that supported that country’s receipt of the second largest ever (after Iraq) Paris Club debt write-off (US$18-billion debt reduction of US$30-billion debt).

His particular expertise is fiscal reform. He served as deputy division chief in the Fiscal Affairs Department of the IMF, where he led technical assistance missions on public expenditure policy and pension reforms; mission chief for Angola and South Africa and division chief in the African Department; and assistant director to two deputy managing directors in the office of the managing director of the IMF.

In his role in Jamaica, according to fund rules, he can only contribute in an advisory and not decision-making capacity (he needs special permission to talk to the press) and must avoid any conflicts of interest.

Describing himself as “an institution builder” on the fiscal side, McDonald’s main purpose here is to help build meaningful fiscal capacity, as Jamaica is “at a critical juncture” and “beginning a process of turning away from the past”.

He noted that “a lot of people had been very welcoming of the budget” with the “macro indicators the best in a generation”, and indeed, at the age of 59, he had not “seen such positive indicators in my lifetime”.

His key goal is to take advantage of the great opportunity to entrench the current stability so Jamaica can mitigate future external shocks through “the strengthening of institutions, policies and consensus”, as well as withstanding our internal political cycle, with a particular emphasis on strengthening the ”transparency and accountability” of the central bank and fiscal management.

Since the financial crisis, fiscal councils have become common (the granddaddy of them all is probably the Congressional Budget Office or CBO created in the early 1970s).

Asked to comment on EPOC, he noted that it had been a good “compromise”, and provided “some accountability”, headed by someone “people respected” but that the challenge now was to “entrench” it, making it “more concrete” with “more clout” as it had “no independent analytical capability”, which is currently provided by the IMF.

He added the planned “fiscal council” would need to be able to look at the numbers to see what made and did not make sense, and therefore needs a different level of capability (and a thick skin) to reflect our level of fiscal maturity to allow it to get the “people formulating policy in government to do it right first time”.

Addressing briefly the current budget, he expressed agreement with the policies followed (see my article Bubble up vs trickle down in last week’s Business Observer for details on its risk management focus) adding, however, that “we can’t ease up yet”, for example by cutting GCT, as we have a credit rating “way higher” than a similar country with our level of debt to GDP due to our good policy performance compared with, say, a country like Argentina.

In particular, he noted Jamaica’s “supply side” constraints, which the tax cuts were meant to help begin addressing through reducing transactions costs, in a similar fashion to that suggested by Emeritus Stanford Professor Donald Harris, who, McDonald also described as a mentor.

In their Board Statement of March 26 the Jamaica Chamber of Commerce argued, “Now, today, is the right time to mobilise young entrepreneurs, women entrepreneurs, entrepreneurs with long track records, and those who are at the beginning of the process and need to be encouraged and supported to take that first step”.

At their upcoming “closed door” breakfast conversation with Calvin McDonald on April 11 at the Knutsford Court Hotel, JCC members will be invited to ask Mr McDonald how the good ship Jamaica can change course to take advantage of the opportunities emerging.