Finance minister says a strong central bank is key
BOJ modernisation Bill goes to Parliament's JSCThursday, October 25, 2018
BY BALFORD HENRY
IN September 2017, the Government's economic reform programme took a significant step forward with the approval of a continuous medium-term inflation target for the Bank of Jamaica (BOJ).
On Tuesday, Minister of Finance and the Public Service Dr Nigel Clarke tabled the Bill amending the Bank of Jamaica Act which will enable price stability as defined in the inflation targets set by him, under a monetary policy determined by a monitoring committee.
Dr Clarke told the House that the only way for Jamaica to chart its own course without undue reliance on the international committee for its basic needs is by building strong and durable institutions of which a strong central bank is key.
“The purpose of the reform is to make sure that we institutionalise low, stable and predictable inflation indefinitely, and therefore as a single reform, as a single legislation, this represents one of the more important reforms that we would have done when we have completed this period of reform,” he said.
Opposition spokesman on finance Mark Golding said the Bill represented another important step in modernising the financial architecture of the country.
“We are coming from a place in which the country's finances have been dominated by the effect of high indebtedness, and that has required significant focus and sacrifice on the part of the Jamaican people and commitment from successive governments to bring that under control,” he added.
He said that he looked forward to “robust and well-thought-out and constructive debate” in the JSC.
Dr Clarke insisted that prior to being debated in the House, the Bill would be sent to a joint select committee of parliament for review.
He named as the members of the committee from the House of Representatives: himself, as chairman; Minister of Justice Delroy Chuck; minister without portfolio in the Ministry of Finance Fayval Williams; minister of state in the Ministry of Education, Youth and Information Floyd Green; and Leslie Campbell, MP, as the government members; and, for the Opposition, spokesman on finance Mark Golding, spokesman on industry and investment Peter Bunting and, spokesman on tourism Dr Wykeham McNeil.
The members from the Senate are expected to be named tomorrow when the Senate is expected to resume sitting.
The Bill proposes that the governor of the bank chair the monitoring committee, and that, in carrying out its functions, the committee seek to achieve and maintain price stability as defined in the inflation target set by the minister, after consultation with the BOJ governor.
The minister will provide the bank with the inflation target that is to be achieved over a continuous basis over the medium term, and shall specify the target measure applicable for inflation and the periods at which performance will be measured.
The inflation target will be reviewed by the minister at such periods as may be determined by him, after consultation with the BOJ governor at the time of providing the target. In carrying out its functions, the committee shall seek to achieve and maintain price stability as defined in the inflation target set by the minister and, subject to that condition, the minister; of finance, after consultation with the BOJ governor, will provide the bank with the inflation target that is to be achieved over a continuous basis over the medium term, and which shall specify the target measure applicable for inflation and the periods at which performance will be measured.
The bank must then promptly publish a notice to that effect in a daily newspaper circulating in Jamaica, and on its website, indicating the target and such other information which is considered necessary.
If the bank fails to meet the inflation target, within 60 days of failing to do so, it must notify the minister of the failure and publish a notice to this effect on its website, including the reasons why it failed to meet the target and any action which it proposes to restore inflation to the target range, as well as any other information considered necessary.