EPOC endorses NIDS - Wants ‘game-changing’ system implemented
The Economic Programme Oversight Committee, EPOC wants the Jamaican Government to stay focused on plans for the implementation of national identification system NIDS, inflation targeting and foreign exchange hedging.
The recommendations come as Jamaica sets to close its latest three-year programme with the International Monetary Fund by year end.
“All the structural benchmarks have been met,” said EPOC Co-Chairman Keith Duncan at his quarterly briefing on the fiscal results. The committee comprises a mix of private- and public-sector representatives.
Jamaica’s revenues and grants totalled $629 billion for the fiscal year ending March 2019, which surpassed targets by 0.2 per cent, while tax collections of $543 billion grew by 9.3 per cent year-on-year. Expenditures were below budget by $13.3 billion, which allowed for the capital budget to grow 41 per cent to $66.2 billion.
Jamaica also closed the year with a fiscal surplus of $24 billion.
Duncan said that there is broad consensus around the implementation of NIDS, saying that notwithstanding the legal challenges faced by the law, the country would benefit from the system.
“EPOC strongly urges the GOJ, the Opposition and other stakeholder groups to urgently get this game-changing initiative back on track and not allow any further slippage,” said Duncan.
In April, the Constitutional Court struck down the National Identification and Registration Act, which was challenged by People’s National Party General Secretary Julian Robinson on behalf of himself, his constituents in St Andrew South East, and the members of his party. The Opposition, while in favour of NIDS, objected to interpretations of the act and its implications for privacy rights. The law would have obligated residents to register for an identity card and provide the State with biometric information as proof of identity.
“My personal view is that we should get it back on track,” Duncan said Tuesday at the EPOC briefing, held at the JMMB Group headquarters in New Kingston. Duncan is CEO of JMMB Group.
“… It can be implemented such that Jamaican people are protected. There’s no reason to be paranoid around the implementation of NIDS,” Duncan asserted. “This doesn’t need to be a political football, in the same way both administrations agree on delivering an economic programme,” he said.
In relation to the foreign exchange market, Duncan noted the volatile swings in the value of the Jamaican currency, which led to private sector calls for action by the monetary authority to stabilise the market.
“EPOC supports a flexible exchange rate and market-determined foreign exchange rate, as the Bank of Jamaica continues to move towards full-fledged inflation targeting,” he said.
The Bank of Jamaica, BOJ, has resisted calls to intervene more aggressively in the market to steady the rate, and has remained consistent in its message that the movement towards a market-driven system would see fluctuations in the exchange rate in either direction. The BOJ has also appealed for patience, saying some of that volatility will be alleviated when the forex trading platform that is under development is commissioned.
The platform will facilitate interbank trading and allow for traders and exporters to buy currency months in advance at negotiated rates.
“This platform, when implemented, is to be integrated with the payments and settlement systems by June 2019 and, subsequently, regulations are to be issued by September 2019, which will allow all market participants to trade all foreign exchange transactions by the end of 2019,” Duncan said.
He also reported that with Jamaica’s fiscal position now in a good place, including a surplus for the fiscal year, the Bank of Jamaica continues in its accommodative stance with the reduction of interest rates to “all-time lows” – the central bank cut policy rates again to 0.75 per cent this week – and also reduced the cash reserve ratio for banks for a second time this year.
The reduction in the ratio, from 9 per cent to 7 per cent, takes effect on June 3 and will free up $12.3 billion for lending, the central bank said in mid-May.
Growth in new business loans, the EPOC co-chair added, is currently outpacing consumer loan growth.
“The implementation of these policy measures continues to contribute to the reduction in Jamaica’s debt levels. Interest costs to the Government of Jamaica also continue to fall. The growth in credit to the productive sector is increasing year-over-year, eclipsing the growth in consumer credit,” he added.
The “aggressive” monetary policy actions should create further stimulus to the financial sector to lend at lower and more favourable terms to the private sector, which in turn should spur growth in private credit and domestic investments, he said.