International Monetary Fund Managing Director Christine Lagarde in conversation with Prime Minister Andrew Holness (centre) and then Ambassador Plenipotentiary for Economic Affairs, Dr Nigel Clarke at the Pegasus hotel in New Kingston last November. Leader of the Opposition Peter Philips is in the background. (Photo: Richard Browne)
Last year, on November 16th, the Jamaican Government partnered with the International Monetary Fund (IMF) in a high-level forum called ‘Unleashing Growth and Strengthening Resilience in the Caribbean’. The conference was in large part organised by then Ambassador Nigel Clarke, and its second session was on fiscal policy and political cycles.
The panel, moderated by Oliver Clarke, included former co-chair of the Economic Programme Oversight Committee Richard Byles; former Prime Minister Bruce Golding; former President of Guyana Bharrat Jagdeo; and Andrea Repetto, president of the Chilean Fiscal Advisory Council. The panel was meant to answer the question: How can improved fiscal institutions safeguard fiscal discipline and ensure that political and electoral motives do not lead to policy reversals, for example fiscal profligacy?
Repetto noted that Chile’s Fiscal Council had an independent panel of experts with two separate panels to forecast gross domestic product (GDP) and prices, and that the credibility of the Fiscal Council was “not built in a day”.
Golding praised the tremendous success of EPOC in terms of government credibility, and noted that 97 countries had fiscal rules covering, for example, the fiscal balance, debt to GDP and, in some cases like Jamaica, wages to GDP.
The latter, he observed, “speaks to the size of government”.
He noted that 10 countries had imbedded fiscal rules in their constitutions, an approach for which he expressed a preference.
Byles, using the example of an audit committee, observed that the IMF would soon be giving up its own “audit” role, and that this needed to be replaced by an EPOC-type mechanism, representing business, labour and civil society, with the same access to information as the auditor general (currently tasked with administering the review of our fiscal rules) and the right to express a public opinion (like EPOC currently).
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