Fri | Aug 18, 2017

Public sector reform plan for Cabinet this month

Published:Wednesday | September 14, 2016 | 9:00 AMMcPherse Thompson
Contributed PhotoChairman and CEO of the Countrystyle Community Tourism Network, Diana McIntyre-Pike, and Minister of Tourism Edmund Bartlett are beaming as they display the awards which they received at the African Diaspora World Tourism Awards and Travel Expo Ceremony held August 26-28, 2016 held in Atlanta, Georgia at the Westin Atlanta Airport hotel. They were both inducted into the Hall of Fame for dedicated service in cultural heritage tourism and Minister Bartlett also received the Caribbean Tourism Minister of Distinction award. The awards honour movers and shakers in black cultural heritage tourism.

This month is the deadline for Cabinet to approve a plan for the first stage of public-sector reform, one of the key qualitative targets under the government's four-year economic support programme with the International Monetary Fund (IMF).

The first stage falls in September when Cabinet is to receive an implementation plan, which will include detailed timelines for the introduction of shared corporate services for communications and human resource management, and the merger, abolition, and/or divestment of government entities.

"Remember, the IMF tests are comprised of quantitative targets - the NIR (net international reserves ) and the primary balance. But there are also qualitative targets that we must achieve, called benchmarks. One of them that is coming up in September is for Cabinet to approve the first stage of the public-sector reform programme," co-chairman of the Economic Programme Oversight Committee (EPOC), Richard Byles, said.

"So a plan has to be brought to Cabinet for Cabinet to approve, which says, 'here are the services in HR and communications that we are going to merge and share across all government enterprises. And secondly, here are the government-owned enterprises that we are going to divest, close down - or some version of that - take it off the books of government'," he stressed.

Emphasizing that it has to be accomplished this month, Byles said that when the IMF staff mission comes to Jamaica for the 14th review in late October or early November, "that's one of the things that they will be measuring".

Referring to a precautionary standby agreement or other arrangement that the government is considering as an IMF successor programme, following the current extended fund facility which expires in March 2017, Byles said "this issue of public-sector transformation is going to loom very large as one of the major benchmarks that need to be achieved".

The EPOC co-chairman, who released the 40th communique of the non-public sector members of the committee at a press conference at Sagicor's offices in New Kingston yesterday, noted that there are no intra-quarter IMF quantitative performance criteria.

A PRIMARY SURPLUS

However, measured against the government of Jamaica's budget, at the end of July the country produced a primary surplus of $36.4 billion, considerably ahead of the target of $14.2 billion.

The NIR stood at US$2.52 billion at the end of August, comfortably in excess of the IMF target for the end of September of US$1.44 billion.

According to Byles, "that primary surplus over-performance was driven in part by tax revenues which were very good and also by expenditure which was much lower than budgeted."

Revenue collection of $153.8 billion for the first four months of fiscal year 2016-17 was well above the target of $142.9 billion.

The taxes that performed the best were General Consumption Tax and Pay-As-You-Earn (PAYE), both $2.4 billion above budget, and company tax, which was $1.5 billion above budget.

Byles noted, however, that the PAYE number "is going to drift off a bit" as the increase in the income tax threshold takes a toll on it.

Travel tax, which was increased when Finance Minister Audley Shaw presented the budget in May this year, underperformed by $0.8 billion, while tax on interest was $0.5 billion below budget and were the main underperformers.

Expenditure for the April to July period was $14.1 billion below budget. Of that amount, recurrent expenditure was $8.3 billion below budget, with under-expenditures across all categories: programmes, $3.8 billion; employee compensation $1.7 billion; and interest, $2.8 billion.

The EPOC co-chairman said capital expenditure continued to lag budget and was $5.8 billion or 36 per cent behind. The late approval of the 2016-17 budget in May instead of March was the principal reason for the under-expenditure.

The large under-expenditure to date and the good tax revenue performance were responsible for the primary balance of $36.4 billion being far ahead of the $14.2 billion budget.

mcpherse.thompson@gleanerjm.com