Auditor general gets funding boost to enforce fiscal rules

Daraine Luton, Senior Staff Reporter

HAVING BEEN saddled with the additional responsibility of ensuring the Government sticks to the fiscal rules to which it has agreed with the International Monetary Fund (IMF), the Auditor General's Department is set to receive a 48.5 per cent increase in its allocation to enable it to carry out its functions.

The 2014-2015 Estimates of Expenditure, which, as of today, will be subjected to scrutiny by the Standing Finance Committee of the House of Representatives, shows that the Government is proposing to give the department $538.5 million to execute its functions this year, up from $362.5 million last year. The allocation, however, is $24 million less than the amount requested, but Auditor General Pamela Monroe Ellis said it is unlikely to have a significant impact on activities since the restructuring of the entity may not start until June.

Monroe Ellis said the restructuring is being done to allow her department to effectively meet its objectives, particularly in light of increased responsibilities. The restructuring, if approved by the Ministry of Finance, will involve an increase in staff from 194 to 207, and the offering of better salaries to employees, as according to the auditor general, the department is not able to attract certain expertise and skill sets "because our salaries are just not competitive".

The allocation to salaries, as reflected in the Estimates of Expenditure, is to be increased from $216.7 million to $391.6 million.

Noting that it is important to engage in capacity building within her department, the auditor general told The Gleaner that there is the need for people who have working knowledge of economics and econometrics to be able to dispute or agree with positions put forward.

"Unlike the FFP (Fiscal Policy Paper), which is tabled once a year, which I will be required to review and comment specifically, the new fiscal rules require more from the auditor general and the involvement of the AG is also not as predictable as it was before, because there are things that can happen that can disturb the plans, and so the AG must be in a position to act on real time," Monroe Ellis said.

60% debt-to-GDP by 2026

Under the amended Financial Administration and Audit Act, which together with the Public Bodies Management and Accountability Act forms the fiscal rules, the finance minister, as at the end of the 2017-2018 fiscal year, is required to take appropriate measures to attain a fiscal balance, as a percentage of GDP, which would allow the debt-to-GDP ratio to fall to 60 per cent or less by 2026. The minister is also required to reduce the ratio of public-sector wages as a percentage of GDP to nine per cent by March 31, 2016.

The Auditor General's Department will be charged with the responsibility of monitoring the attainment of targets set under the regime, receiving data from the Planning Institute of Jamaica or the Bank of Jamaica, depending on the type of crisis, and determining whether escape clauses built into the legislation can be triggered. Jamaica may diverge from its fiscal plan under extraordinary circumstances, such as natural disasters, public emergency, or a financial crisis, but only if the impact on the economy from such events amounts to at least 1.5 per cent of GDP.

Monroe Ellis said the economic assessment unit within her department will have to be on its toes as it seeks to examine the programme.