No "Sacred Cows" in Rationalisation Process, Says Finance Minister

Minister of Finance and the Public Service, Hon Audley Shaw, says that there will be no “sacred cows” in the Government’s programme of rationalising the public sector.
“There will be no sacred cows, as we look at every institution in the public sector. Everyone must justify its existence,” Mr. Shaw told a Planning Institute of Jamaica’s (PIOJ) seminar at the Jamaica Pegasus Hotel, New Kingston, on Wednesday (November 25),
The seminar focussed on the role of the domestic financial and capital markets in Jamaica’s transformation. Mr. Shaw, the keynote speaker at the opening ceremony, said that Jamaica’s re-engagement with the International Monetary Fund (IMF) offered an opportunity to deal with these issues that can redound to Jamaica’s benefit. However, he said that it was not necessary for the IMF to dictate to Jamaica the need for transformation.
“This Government is fully aware of the need for that change, and we have started very critical work in creating the atmosphere that is going to propel us towards that change,” he said.
He noted that Jamaica has been working with the PIOJ and the other multilateral entities, including the World Bank, the Inter-American Development Bank, the Caribbean Development Bank and the European Union (EU) to put together a “whole set of performance matrixes”.
“They cover the full gamut from a whole new fiscal responsibility framework, to one in which Government is going to have to be prepared to set rules of engagement in terms of the extent of exposure on debt,” he said.
This would include ceilings on debt to GDP ratio and on fiscal deficits, to stop crowding out the private sector by keeping interest rates high. Alluding to Jamaica’s previous relationship with the IMF, particularly during the 1980s, he said it yielded significant benefits for Jamaica.
“We kept the IMF for the full eight years of Government. We kept them because we had access to money at two percent and two and a quarter percent. But, we so structured the economy that, by 1986, we were beginning to see rates of growth of seven per cent per year,” he said.
“The point I am making is that, if you use the opportunity of cheap money, whether it is from the IMF or the other multilateral institutions, you give yourself the breathing room, at the macroeconomic level, to allow for investment in the private sector to take place. So you can use IMF support in a positive way,” he explained.
Mr. Shaw said that re-engaging the IMF could be a “defining moment” in Jamaica’s economic landscape, where the burden is shared and spread.
“We need to wake up and understand that there are consequences to our economy, if we believe that the industrialised countries of the world can be operating at between zero and four per cent Treasury Bill rates, (while) we can be going along at 15, 16 and 17 per cent interest rates. It can’t work,” Mr. Shaw stressed.