Trillion-dollar asset-owning State enterprises, drain on public purse
With Jamaica's public bodies collectively owning more than $1 trillion worth of assets and failing to make a positive impact on the country's gross domestic product (GDP), the Andrew Holness administration is moving to hold these enterprises accountable for achieving commercial returns on their assets.
State Minister for Finance and the Public Service Fayval Williams signalled yesterday that significant changes are coming for Jamaica's public bodies in the wake of an International Monetary Fund (IMF) study, which shows that between 2002 and 2014, the average annual return on asset of public enterprises has been
-2.8 per cent.
Reporting on a study conducted by the Jamaican Government in partnership with the Fiscal Affairs Department of the IMF, Williams said that based on the findings of this survey, public bodies will be subject to new categorisations, with the appropriate legislation to support this.
Of the 190 existing public bodies, 42 per cent, or 80 of them, are characterised as self-financing, while another 110 are supported by central Government. The total gross assets of 64 public bodies are $1.1 trillion. This is $6 billion less than Jamaica's GDP, which sits at $1.7 trillion.
Further, Williams reported that the contribution of the public bodies to GDP in 2014 was 0.3 per cent compared with other small-island states, which ranged from 1.2 per cent to a high of 11.9 per cent.
REASON TO PAUSE
"These results should give us pause when we consider that the public enterprises were only able to contribute 0.3 per cent to GDP despite having subsidised capital, monopoly market power in some cases, and ongoing taxpayer cash transfers in other cases," Williams argued.
She said the administration believes in holding the country's public bodies accountable for achieving commercial returns on the $1.1 trillion of assets they collectively own.
"We support mechanisms for long-term improvements in productivity of state assets. These mechanisms include full privatisation; partial privatisation, through public listing on the local stock exchange; [and] joint ventures or public-private partnerships."
Williams said the Government favoured stock exchange listing as this would not only generate revenue for Jamaicans, but, more important, the listing would introduce disclosure and governance requirements.