Editorial | Nigel Clarke in the post-IMF world

Nigel Clarke is to deliver a major policy speech tomorrow in which he is expected to map out the outlines of an expanded architecture for the post-International Monetary Fund (IMF) oversight of Jamaica's fiscal affairs.

Dr Clarke is the finance minister, a job he has, thus far, held for two months. He can be reasonably expected to continue in it for at least another three years or so, unless Prime Minister Andrew Holness calls an early general election. So, with Jamaica's current US$1.64-billion standby agreement with the IMF scheduled to end in 18 months, and the Government seemingly disinclined to enter a new programme, Dr Clarke will be crucial to what this new environment looks like.

He has clearly been giving this issue much thought, for tomorrow's speech is a follow-up to a conference he organised last year, while an adviser to Prime Minister Holness, that looked at advancing fiscal responsibility frameworks in Jamaica and the Caribbean.

So far, he has framed the issue as achieving "economic independence", by which he appears to mean managing the country's affairs in such a manner that the Government has greater freedom to deploy fiscal resources to areas of perceived priorities, rather than having those priorities being set for it.

Said Dr Clarke in a recent speech: "It has to be our ambition, therefore, that when we conclude with the IMF this time, we avoid reversal, and instead, manage our affairs in a thoughtful and disciplined way so that our exit is sustained over time, with no need to return. This must be our goal even as Jamaica, a member institution of the IMF, always retains the option to access the wealth of the IMF's technical advice capacity over the course of time."

This newspaper has no conceptual disagreement with that assertion. Except that, as we said previously, we are not sanguine that the fiscal discipline the country, across two administrations, has displayed over the past six years, but under the tutelage of the IMF, is sufficiently baked in, as to be deemed secure.

Politicians, a caste of which Dr Clarke is now a member, are notorious, especially when faced with the exigencies of relating to the preservation of office and power, for compromising on principle. In this regard, Jamaica should at the end of the current programme enter a new agreement with the IMF, perhaps with adjusted (softer) conditionalities, but continued rigorous oversight.

Still vulnerable

The normal criteria for IMF agreements notwithstanding, there is a strong case to be made for a new programme. The country may no longer be at the edge of a fiscal cliff and the balance of payments may be manageable, but with a debt still nearly one-and-a-quarter times its annual output, Jamaica is only a global economic hiccup away from a fiscal crisis.

An IMF agreement would, in our view, obviate any element of a sound infrastructure Dr Clarke might unveil tomorrow, including, perhaps, a legislatively anchored EPOC-type body, as has been publicly promoted by former EPOC Chairman Richard Byles, and the opposition leader, Peter Phillips. Indeed, EPOC (Economic Programme Oversight Committee) was an important watchdog that helped to maintain the Government's commitment to the IMF targets, especially during the early period of the agreements.

Hopefully, Dr Clarke's thinking hasn't been limited to creating new frameworks to new laws aimed at improving the accountability of public officials. Radical institutional overhaul, including of the ministry he runs, shouldn't be off the table.

For instance, it is a worthy consideration for the finance ministry to be slimmed down, with the remit for budget, revenue, fiscal oversight and narrowly related matters, leaving esoteric areas of economic planning and management to other parts of the Government. It is creating at the finance ministry, in concept and culture, the sense of being the fiscal enforcer, where every penny of expenditure has to pass the test relative to its impact on a balanced Budget, the debt in relation to GDP and its impact on inflation.