Senate approves public fiscal management Bills

Amendments to the Financial Administration and Audit Act and the Public Bodies Management and Accountability Act were passed in the Senate on Friday (March 12), as part of measures to implement a fiscal responsibility framework in Jamaica.
Leader of Government Business and Minister of Justice, Senator Dorothy Lightbourne, who piloted both Bills, stated that the fiscal responsibility framework will provide for more prudent fiscal management within Government’s institutional framework.
She also noted that the recently signed Stand- by Agreement with the International Monetary Fund (IMF) requires that Jamaica implement a medium-term fiscal consolidation plan, with precisely defined quantitative targets.
“The framework will directly support this requirement and, more broadly, confirm the commitment of the Government of Jamaica to institute a culture and process that will promote fiscal discipline,” Senator Lightbourne said.
The Public Bodies Management and Accountability Act amendment will prohibit public bodies from taking steps to negotiate loans by way of bonds issues, without prior approval from the Minister.
The amendments provide 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.
It also requires that the Minister table in Parliament for approval, before the end of each financial year, estimates of revenue and expenditure in respect of all public bodies.
The Financial Administration and Audit Act has been amended to impose a duty on the Minister of Finance to table in both Houses of Parliament a Fiscal Policy Paper containing, among other things, a macroeconomic framework providing an overview of the state of the economy.
The Bill also seeks to impose 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 authorised under a warrant issued, pursuant to section 117 of the Constitution, if the exigencies of the financial situation so require.
Opposition Senator Mark Golding reacted that both Bills were important pieces of legislations and fundamental to the way in which the country’s financial affairs are handled, but they needed sanctions to be effective.
He pointed out that the key point was the fiscal targets in the Financial Administration (Amendment) and Audit Act, which require Jamaica to, essentially, have a balanced budget by March 31, 2016, and to reduce the debt to Gross Domestic Product (GDP) ratio to below 100 percent by that date.
He said, however, that even though the targets are written into law, there is a need for accompanying sanctions for non-compliance.
He also suggested interim targets on some of the measures, especially the fiscal balance, and the moving of the fiscal balance from where it is in the current fiscal year, which is a little over 12 percent of GDP.
“To get that to zero, it is going to take a concerted effort over time, and I think a six-year target is insufficient,” he said.
In response, Senator Lightbourne noted that the targets in the legislation follow international standards, and are in line with the targets set out in the IMF programme.
“It is something that we have to work towards, it is a start and it is a work in progress,” Senator Lightbourne responded.
Both Bills were passed in the House of Representatives on February 23.