Ambitious Budget, but watch corruption
Finance Minister Dr Peter Phillips has made a historic move in fiscal accountability, presenting the Budget a good two months earlier than ever before. This allows for us to evaluate his plans and, unlike in other years, there is no 20/20 hindsight. It is simply about getting it right the first time. It is a heavyweight budget, a whopping J$641-billion Budget, for fiscal year 2015-2016, compared to the J$539 billion year prior - a clear sign that the cash-strapped minister is not on a financial diet.
Phillips, given the black stamp by International Monetary Fund IMF) chief, Christine Lagarde, must be given a two-hand pat on his back. Having passed six consecutive IMF quarterly tests, a task many former financial wizards would begrudge, Phillips can boast of an inflation rate of 6.4% in 2014, compared to 9.5% in 2013. Add to that a 7.3% current account deficit of 2014, contrasted with 15% three years earlier, a 74% increase in foreign direct investment. It is easy to understand why our rating on the Ease of Doing Business Index flipped numerals to 58 from the previous 85 of 189 countries, making Jamaica rated the 'best country in the Caribbean' along that scale.
I will reserve my comments on the wage bill until I have received my last outstanding payment as a UWI lecturer, but the expected J$8-billion shortfall has to be found from new sources of revenue. My suspicion is that rather than implementing new taxes, he and his able agents in the various arms of his ministry and other revenue-protection departments will seek to have finer mesh in the webbing, to catch many of the big fish and small minnows, who are not giving unto Caesar. For even a malnourished man, this Budget is tight, and the minister has little wiggle room.
Almost half of every dollar budgeted will be for the servicing of debt, much of which we owe to multilateral agencies and foreign creditors. I wouldn't want Phillips' job because, after that J$310 billion is spent, we better pray that the dollar doesn't slip again; because any slide will put us deeper in debt and a stink in the financial sector.
But Phillips, in digging out the 'taxscapees', has to first pick out the log out of the eyes of his charges. While attorney Kent Gammon pushes to have the FINSAC enquiry completed, baiting the attorney general to act speedily, reports now surface that scores of public officers have not complied with the Corruption Prevention Act (CPA). Administered by the Corruption Prevention Commission (CPC), it has found several public servants wanting in the past, and even once dragged in the minister responsible for the blunder with sensitive credit information being made public.
Financial/fiscal transparency is a sine qua non as we attempt to move forward. It is extremely disturbing that some 44 employees of the Bank of Jamaica (BOJ), the heartbeat and perhaps brains of the entire fiscal system and Jamaican economy, are the main delinquents of the 72 persons facing court last week.
Inasmuch as the offence is simply not reporting, I ask the same question as regards the senior members of the constabulary, who were themselves slapped with charges over their refusal to provide the CPC with the requisite information in a timely fashion. What is there to hide? The decision by the authorities to prefer charges could not have been arrived at frivolously. Persons must have been asked and eventually warned. It is a major breach that central bank senior officers are not opening up their accounts and dealings to scrutiny, as is required by law.
Let us not lose sight: This is the same institution that either gave, or did not give, enough oversight over the runaway and irresponsible behaviour within the financial sector that led to its crumbling, a rescue by FINSAC, and an incomplete report that either the Government is unable to finance or is unwilling to have completed. Do not take it lightly. The BOJ is the nerve centre that dictates to all commercial banks what the nominal rate of exchange is. As inconvenient as this rate might be for some economists, it is what is used when we are paying for goods and services.
Therefore, since we still have to pay a large part of our debt in foreign currency, any movement in the value of our own Sangster will have an impact on our national debt and all the balance of trade and balance of payment issues. We know that in the past, and perhaps currently, non-market forces such as hoarding and speculation have led to artificial decreases in the Jamaican dollar in comparison with the American. Moreover, based on the fluidity of the foreign-exchange market, large numbers of independent traders, some with apparent deep intimate knowledge, have become millionaires from trading between international currencies.
I don't care if my dear friends at the BOJ are upset with me. I want to know, for their own reputation sake.
Resistance to compliance has doubled in the past decade, with some 52 per cent of those covered by the CPA ignoring it in 2012, compared to 25 per cent in 2003. Among the main delinquents are persons in Tax Administration Jamaica.
Corruption is not necessarily as bad as most other countries in Latin America. However, I have to once more return to the Transparency International report of 2013, which suggested that important sectors of our institutions are indeed less than squeaky clean. Though small, some three per cent of Jamaicans said they paid a bribe to members of the tax services.
In closing, the signs are good, but the openness is indispensable.
- Dr Orville Taylor, senior lecturer in sociology at the UWI and a radio talk-show host, is the 2013-14 winner of the Morris Cargill Award for Opinion Journalism. His just-published book, 'Broken Promises, Hearts and Pockets', is now available at the UWI Bookshop. Email feedback to email@example.com and tayloronblackline