Editorial | Kudos on Budget projections
An insufficiently noted or commented-on element of the Budget Estimates tabled in Parliament last week by Finance Minister Audley Shaw is that he set out a detailed medium-term spending plan.
In other words, Mr Shaw showed not only how much, or on what, the Government intends to spend in the 2018-19 fiscal year, but projects through to 2021-22, or for another three fiscal years, something even large Jamaican companies do not execute. This is important in several respects.
First, Jamaica's finance ministers have been talking about this medium-term approach to budgeting for several years, and it was specially a matter of substantial discourse during the time of Omar Davies in the late 1990s up to the mid-2000s. He didn't get it done. Nor did Mr Shaw in his first stint in the post during the Golding-Holness administration of 2007 to 2011. It did not happen during the rapidly reformist period of Peter Phillips, though it was clearly on the agenda of the International Monetary Fund. So, Mr Shaw deserves credit for getting it done.
This system - we make no statement about the credibility of the minister's projections - brings transparency to budgeting, including what the Government expects to have as its priorities over a longer period rather than merely on an annual basis. The society, in the circumstance, can better debate these matters and their likely impact on policies for economic growth and social stability.
Critically, too, such spending projections allow for the making of inferences about the Government's financing needs over the period, and, therefore, borrowing and tax requirements. Which brings us to the other matter that, for completeness, ought to be attended to by Minister Shaw.
In this move for greater fiscal and macroeconomic order, the Government's borrowing and taxation requirements should be left only for the market to surmise. The finance minister should give clear projections on these in pre-Budget statements, without saying what specific goods, services or activities are to be taxed, if that is a matter of concern. Indeed, such a predictable environment would be good for business, investment and job creation.
Jamaica has done much over the last seven years to achieve fiscal and macroeconomic stability. The latest initiative would further solidify those gains.