Prudent Fiscal and Debt Management Will Get Positive Response – Shaw

Finance and Public Service Minister, Audley Shaw, has emphasised that once the administration practises prudent fiscal and debt management, stakeholders at virtually every level would respond in a very positive way.
These stakeholders, he pointed out, include the international capital markets, and multilateral organizations, such as the International Monetary Fund (IMF), the World Bank, and Inter-American Development Bank (IDB), which he said were all looking for strong signals of fiscal responsibility on Jamaica’s part.
Speaking at the Private Sector Organization of Jamaica (PSOJ)/Citigroup Annual Economic Seminar, ‘Going for Growth’, at the Bank of Jamaica (BoJ) auditorium, today (June 5), Mr. Shaw listed five key areas on which the Government would focus. These are: a strong and disciplined approach to fiscal and debt management; reformation of the tax system; a reduction of bureaucracy, corruption, and waste; increased aggressive promotion of foreign and local investments; and examination of the prevailing energy crisis.
“We have sent some early signals. When we took over (the Government) in September, we had six more months to go in the fiscal year and we had to revise our deficit target from the 4.5 per cent that had been set by the previous administration, up to 5.5 percent; this, because we had to take on board a number of additional budgetary items, not all of them inherited. Some of them, to be fair (were) hurricane Dean-related, (and) others, of course, were in part inherited, like Air Jamaica, which, itself, is a major problem,” the Minister said.
“But we took them on board, and we aggressively did what we had to do. We cut expenditure where we had to, and we ramped up enhancement of revenue where we had to. And the fiscal deficit ended up, I am pleased to say, at 4.7 per cent. That was a good start,” he added.
On the matter of debt management, Mr. Shaw stressed that this was not an area which the administration was going to be able to “solve overnight,” adding that there was need to take a “serious and critical look at it.”
“The truth is that the debt burden that we face now hangs, virtually, like an albatross around the neck of the Jamaican economy. It militates against and crowds out investment in the productive sectors of the economy. We can’t just talk about it anymore, we are going to have to do something about it,” Mr. Shaw asserted.
He advised that shortly, he would need to return to Parliament to increase the debt ceiling, pointing out that “when you are in a (debt) situation, you can’t just wave a magic wand and begin to lower your debt.”
“What we have to do now is to grow ourselves out of our debt problem, such that the debt as a percentage of gross domestic product (GDP) becomes increasingly something that is a diminishing factor,” the Minister argued.
He stressed the need to “look for cheaper money,” so that, over time, the market rate of money in Jamaica could be brought “down to levels that are acceptable for cost effective private sector investment.” He also underscored the need aggressive promotion of local and foreign investments in Jamaica.
The Minister highlighted the need to establish partnerships between multi-lateral financial institutions and the private sector, which could yield policy-based and project-specific loans, to undertake initiatives in areas such as education.
On the issue of tax reform, Mr. Shaw cited the importance of administrative reform in order to effect the desired change in the cultural approach to tax evasion, which would yield the desired level of compliance. To this end, he alluded to the recent appointments of persons to head the Inland Revenue Department, Financial Investigation Division, and Customs Department. Additionally, he said that the fiscal services unit was being “ramped up” through the implementation of technology, which would facilitate the “cross-fertilization” of information.
In regard to energy, Mr. Shaw said it was an area which the government, and country in general, could “no longer afford to give lip service.”
“We look forward to working with the IDB to support investment in alternative energy. The Minister of Energy is going to announce in Parliament, shortly, a very intensive programme of energy conservation.a whole communication programme to get every Jamaican imbued with the sense of urgency that is required for us to understand that we can conserve,” Mr. Shaw pointed out.