Tue | Dec 6, 2016

Government to give forecast on critical target

Published:Thursday | February 19, 2015 | 12:00 AM

THE GOVERNMENT will today provide a forecast of a critical target under its programme with the International Monetary Fund (IMF) when Finance and Planning Minister Dr Peter Phillips tables the Fiscal Policy Paper (FPP), which will indicate if the administration will attain the nine per cent ratio of wages as a proportion of gross domestic product (GDP) by March 2016.

The finance minister has indicated that while the Government did not intend to negotiate another wage freeze with public-sector bargaining units, the administration has sought to temper the expectations of government workers. To drive home his point, Phillips said recently that the "Government did not have a pot of gold".

Public-sector workers have been under a wage freeze since 2011 and some unions have already begun to agitate for speedy negotiations with the Government this year so that workers can receive an increase early in the new financial year.

The Auditor General's Department is required to conduct a review of the FPP this month, and in particular, the Government's nine per cent wage-to-GDP target. This is a requirement under the IMF programme.

Under the amended Financial Administration and Audit Act, the minister's responsibility to take appropriate measures to reduce the ratio of wages paid by the Government, as a proportion of GDP to nine per cent, is the only fiscal target that has not changed either in terms of numerical target or the timeline for achieving same.

LATITUDE TO DEVIATE

The fiscal rules give the finance minister some latitude to deviate from stipulated fiscal targets in the event of a disaster, a severe economic contraction or a financial crisis.

In the event of natural disasters or any other occurrence that may disrupt the Government's fiscal plans and impact its targets, the administration can suspend the fiscal rules for up to two years.

However, the auditor general must validate that the situation is of such that it warrants deviation from the fiscal targets as it would have a negative impact on the GDP.

Auditor General Pamela Monroe Ellis said her department would also have the responsibility of assessing the public-sector investment entities in order to determine if they are of a commercial nature.

The regulation of the Public Management and Accountability Act specifies the criteria that an entity is expected to meet to be classified as commercial. The auditor general will be required to review the financial statements and other important records of these entities.

The auditor general also has the task of reviewing public-private partnership arrangements to assess the Government's risks, if any, in relation to its assets or liabilities.

Monroe Ellis told The Gleaner that the finance ministry has granted approval for her department to engage persons to fill critical positions that would boost the department's capacity to carry out its expanded role.