Gov’t Starts Fiscal Responsibility Process

Minister of Finance and the Public Service, Hon. Audley Shaw, on Tuesday (March 25), tabled the first copy of the Public Sector Consolidated Estimates of Expenditure (2010/11), consistent with Government’s decision to establish a fiscal responsibility framework for the public sector.
In late February, the House of Representatives passed amendments to the Financial Administration and Audit (FAA) Act and the Public Bodies Management and Accountability Act, to create the environment for the fiscal responsibility framework.
Mr. Shaw, who piloted both Bills, stated that the framework would be the centrepiece of the reforms being undertaken to improve the management of public finances, and address areas of weakness in the existing fiscal policy and fiscal administrative systems. They require that the Minister lay before Parliament, for approval before the end of each financial year, estimates of revenues and expenditure in respect of all public bodies.
On Thursday, Mr. Shaw tabled the Public Sector Consolidated Estimates of Expenditure (2010/11), along with the 2010/11 Estimates of Expenditure, for the first time, in keeping with this programme.
He explained that, in the past, Government tabled the Estimates of Expenditure prior to tabling the Jamaica Public Bodies book, which contains the budgets of some 168 Public Bodies. However, on this occasion the Public Bodies book was tabled along with the Budget, in addition to the new Public Sector Consolidated Estimates of Expenditure.
The Consolidated Estimates he described as, “basically, a summary of the two other documents”, and include figures for both the regular budget, as well as the budget for the public bodies.
It revealed projected expenditure of some $859 billion this financial year by the bodies, including the National Housing Trust (NHT), Urban Development Corporation (UDC), Caymanas Track Limited (CTL), National Health Fund (NHF), Petroleum Corporation of Jamaica (PCJ), National Water Commission (NWC), Port Authority of Jamaica (PAJ), Road Maintenance Fund (RMF), Jamaica Urban Transit Company (JUTC), PetroCaribe Development Fund, National Insurance Fund (NIF) and the Coffee Industry Board.
The changes to the Public Bodies Management and Accountability Act prohibit the bodies from entering into negotiations to borrow money, by way of an issue of bonds, without the prior approval of the Minister. The Act also provides for corporate plans of public bodies, and any subsequent modifications of such plans, to be submitted to the Minister for endorsement and laid before Parliament for approval.
The Financial Administration and Audit Act’s amendment imposes a duty on the Minister of Finance to table in Parliament a Fiscal Policy Paper containing, among other things, a macroeconomic framework providing an overview of the state of the economy.
It also imposes on the Auditor General, a duty to review the fiscal policy paper and report to Parliament thereon, and to authorise the Finance Minister to withdraw, suspend, or impose conditions on any expenditure, under a warrant issued pursuant to section 117 of the Constitution, if the exigencies of the financial situation so require.
Mr. Shaw said that these changes will allow Parliament to have greater oversight of the operations of public bodies.