Legislation to Strengthen BOJ Operations for Parliament by October

Cabinet-approved amendments to several laws governing Bank of Jamaica (BOJ) operations to make the entity more independent are expected to be tabled in Parliament in October.

This was disclosed by Finance and the Public Service Minister, Dr. the Hon. Nigel Clarke, who said the proposed amendments relate to the Bank of Jamaica Act, Banking Services Act, and the Public Bodies Management and Accountability Act.

He was delivering a special policy address on the BOJ’s modernisation to a wide cross section of stakeholders at The Jamaica Pegasus hotel, New Kingston, on Thursday (July 26).

Dr. Clarke said the changes are intended to enhance the BOJ’s governance structure through clear demarcation and assignment of roles for policy decision-making and daily management.

The objective, he said, is to ensure that strong systems of accountability are in place at the BOJ in keeping with its revised mandate of pursing and achieving low, stable and predictable inflation under the monetary policy.

He noted that under the proposed reforms, the Finance Minister will no longer have the ability to give directions on monetary policy, thereby giving the Central Bank greater autonomy and making the entity operationally independent.

This, he said, will involve strengthening existing statutory committees and establishing new ones.

Dr. Clarke explained that the Central Bank Governor will be required to submit policy statements on the BOJ’s performance in this regard to Parliament and to publish these at least every six months, or more often if so directed or determined.

Additionally, the Minister said the Governor will be required to appear before Parliament at scheduled intervals to present monetary policy updates and answer questions.

Dr. Clarke said other key reforms designed to strengthen the BOJ’s independence include measures to ensure that the tenure of board members is long enough to facilitate their own independent inputs in monetary policy proceedings; and developing sufficient expertise and capabilities to enable directors to successfully discharge their functions.

The Minister said the package of proposed reforms are, arguably, some of the most consequential over the last five years, and he anticipates that they will be taken through the various stages of the Parliamentary process come October.

“I am confident that a strong institutional framework that delivers on a strict and narrowly defined mandate of price stability with strong provisions for oversight and accountability… and arrangements for embedding best practices for collective decision- making is a necessary pillar in building the kind of future we want and the kind of future we can be proud of for all generations to come,” Dr. Clarke said.

He noted that the measures represent the second pillar in the Government’s thrust in securing Jamaica’s economic independence, and follows Cabinet’s recent approval of the establishment of the country’s independent fiscal council.

Dr. Clarke said it is envisioned that the council will provide “legislative and institutional permanence” to the principles of enhancing accountability in fiscal policy, deepening the transparency of government finances, strengthening the credibility of Jamaica’s fiscal path, promoting inclusiveness in the policy discussion, and engendering greater societal ownership of the country’s economic direction.

“Economic independence means taking full and competent responsibility for economic fortunes. Achieving this requires the development of strong public-sector institutions and long-term thinking and mechanisms for consensus-building that will allow us to pursue policies with greater flexibility and having increased ability to address areas that Jamaican people consider as priorities,” he noted.