Wehby calls for speedy establishment of independent Fiscal CouncilMonday, June 01, 2020
BY BALFORD HENRY
Government Senator Donald Wehby wants the proposed independent Fiscal Council to be established “as quickly as possible”.
Senator Wehby made the call during the debate on the amendments to the Financial Administration and Audit Act (FAAA) in the Senate last Friday.
They amendments are aimed at, among other things, giving effect to the need to extend the legislated target date for reducing Jamaica's debt to GDP (gross domestic product) to 60 per cent by two years, from March 31, 2026 to March 31, 2028.
He noted that two years ago, Minister of Finance and the Public Service Dr Nigel Clarke had proposed establishing an independent Fiscal Council to replace the current oversight body, the Economic Programme Oversight Committee (EPOC), which was established in 2013.
EPOC monitored the economic reform measures introduced under government's stand-by agreement with the International Monetary Fund (IMF), which has ended.
“There was wide consultation with the private sector and with the Opposition, and also with the diplomatic community about the Fiscal Council. All I am saying is that this is a council that we should focus on establishing, as quickly as possible, by passing the necessary legislation,” Wehby said.
He said that no one could argue that the decision facing the current Government “is obviously not an easy one”.
Wehby noted that sacrifices have been made to reduce the debt to a manageable level at this time.
“But, the truth is that, what is happening in the world, no Jamaican Government has ever been faced with a crisis like this. I believe that the Government, [Prime Minister Andrew] Holness and his Cabinet are doing a very good job in steering the country through this crisis. That is my opinion,” added Wehby.
He highlighted that at the start of the fiscal year the country had reserves of some $70 billion, up to the time of the intervention of the COVID-19 pandemic and argued that this was “ a testament to the proper management of the economy”.
The vote to amend the Act was piloted by Leader of Government Business in the Upper House, and Minister of Foreign Affairs and Foreign Trade, Kamina Johnson Smith who argued that the amendments were proposed in light of the severe disruption to global and domestic economic activities caused by the COVID-19 pandemic.
Johnson Smith said the pandemic has wreaked unprecedented economic and fiscal burdens and, as such, Jamaica's revenue 2020/21 revenue inflows are expected to decline by $81 billion, even as the Government will be required to spend an additional $34 billion for COVID-19-related matters.
Against this background, she said, the Government needs more time to reduce the public debt to 60 per cent of GDP.
“The matter was considered deeply and discussed with the International Monetary Fund and other key stakeholders before it was fully crystallised in the form of the Bill being taken here today,” she said.
Johnson Smith said as a result of the disruptions, Jamaica's 2020/21 fiscal year growth out turn is forecast to contract by 5.1 per cent.
“While the budget, approved in March, was cast against an economic growth expectation of 1.1 per cent, even at the time of the tabling of the budget, the inevitability of tabling supplemental budgets was brought to the fore by Minister [of Finance and the Public Service Dr Nigel] Clarke,” she noted, adding that “it was clear that there would be significant impact”.
The minister pointed out that “like the [rest of the] world, we would need to observe how events would unfold locally and across the globe to get a sense of the extent [to which] we would be impacted”.