Sat | Aug 19, 2017

Please, sir, I want some more

Published:Tuesday | November 3, 2015 | 11:01 AMGordon Robinson, Contributor

There's hope.

I recently experienced the sort of transparent, participatory, responsive and caring governance I'd thought was lost to Jamaica. On October 22, hand in hand with the Old Ball and Chain, I attended the first of an intended series of meet-and-greet sessions arranged by Member of Parliament Julian Robinson. He calls the series 'Let's Talk', and his first guest was Finance Minister Peter Phillips.

The event was well organised, comfortable and enjoyable. It bore no resemblance to a political rally. It seemed a genuine attempt to address constituents' concerns in a direct, open, informal and informative way. There was some politicking, but not an unbearable amount. The minister gave a brief economic overview from his perspective and then answered a range of queries from the fully engaged audience without evasion, rancour or political posturing.

Unfortunately for me, microphones weren't provided for the audience, who were cautioned to use their "platform voices". Since I don't have one of those, I was unable to ask a question. But, the next day, I emailed my question to the MP; he immediately forwarded it to the minister; and I received a fulsome reply that same day. Bwoy, if only we could have election every year. Anyway, I don't mean to be churlish, because I truly appreciate the open and cooperative approach. My question and the minister's answer are reproduced below:

Q: Based on the minister's presentation, it's the IMF [that's] to be congratulated for the macroeconomic improvements. The cracking of the quarterly whip seemed to be the catalyst for fiscal responsibility. While in office, what, if any, systemic safeguards has this Government or minister put in place to ensure accountability/fiscal responsibility AFTER the IMF goes?

A: The commitment to fiscal consolidation is institutionalised through fiscal rules legislated in the Parliament which, among other things, provide for a specific debt-reduction path and also provide for an automatic correction mechanism for any deviation from fiscal targets. Specifically:

The framework aims to limit the annual budgeted overall fiscal deficits of the public sector (covering all fiscal activities) to achieve a reduction in public debt to no more than 60 % of GDP by 2025-26.

 

annual overall balance target

The rule has established an automatic correction mechanism that would be triggered by substantial cumulative deviations from the annual overall balance target. Ex post deviations from the fiscal balance target will be debited in a notional account. Once the cumulative deviations exceed a pre-specified threshold, additional fiscal adjustment would be required in subsequent fiscal years to correct for these deviations to bring fiscal performance back in line with the fiscal rule.

The rule also includes an escape clause, limited to major adverse shocks and triggered only with parliamentary approval. The clause pre-defines a clear list of events or shocks that could have a serious adverse impact on public finances, and specify measurable conditions for triggering the clause, such as declines in GDP or fiscal revenues. Independent validation of the event or shock will be required before the escape clause can be initiated by the Ministry of Finance and Planning.

Transparency and accountability are further enhanced through:

1. Parliamentary hearings and public statements by officials. The minister of finance and planning is required to explain deviations from the fiscal rule in a midterm budget review in Parliament and outline corrective steps to get back on track with the annual fiscal-rule target.

2. Independent oversight of the fiscal budget and economic policy path by the Office of the Auditor General. The capacity of the Office of the Auditor General (OAG) has been augmented to allow it to provide an independent assessment of the macroeconomic and budget forecasts underpinning the budget, as well as the quality of adjustment measures, and the proper treatment of PPPs.

The Financial Administration and Audit (Fiscal Responsibility Framework) Regulations 2012 ... outlines what is required. This is on the GOJ website under "Documents - Public Sector Governance."

I don't want to rain too heavily on anybody's parade, especially when that person has acted in the best traditions of good governance, so I'll only point out mildly that these tools, although well-meaning, aren't real safeguards because all can be changed by a simple parliamentary majority. In the context of Jamaica's awkward parliamentary arrangements, this gives comfort to no sensible person. In the past, legislated debt ceilings were just as illusory and easily blown away as roofs during Gilbert.

Nevertheless, I congratulate Julian Robinson and Peter Phillips for trying. I feel like Oliver: "Please, sir, I want some more."

Peace and love.

- Gordon Robinson is an attorney-at-law. Email feedback to columns@gleanerjm.com.