- The Senate on Friday, March 21, passed the fiscal rule legislation, as the government moves to put a cap on what the country can spend.
- The fiscal rules seek to bolster transparency within the economy and ensure a sustainable budget.
- The Bills, the Public Bodies Management and Accountability (Amendment) Act, 2014 and the Financial Administration and Audit (Amendment) Act, will be enacted by March 31.
The Senate on Friday, March 21, passed the fiscal rule legislation, as the government moves to put a cap on what the country can spend.
The fiscal rules seek to bolster transparency within the economy and ensure a sustainable budget. Their enactment means that Parliament will have a greater responsibility in the management of the country’s economic affairs.
The Bills, the Public Bodies Management and Accountability (Amendment) Act, 2014 and the Financial Administration and Audit (Amendment) Act, will be enacted by March 31.
In opening the debate, Minister of Justice, Senator the Hon. Mark Golding, noted that the legislation is important as Jamaica, for a long time, has been in a precarious position of high debt and low growth.
“Indeed Jamaicans are tired of the inadequate social services and low levels of public investment which have resulted from the burdens of carrying our enormous debt. Jamaicans want a solution that will stand the test of time. Our debt must be brought down to sustainable levels and we must put in place arrangements to ensure that we never allow ourselves to get back to such a situation again,” Senator Golding said.
He noted that if the country takes this stand for permanent sound fiscal management, “we are purchasing a solid insurance policy for our nation’s future.”
“Our goal is to reduce the debt to Gross Domestic Product (GDP) ratio substantially over the next 10 to 12 years so as to reap the generally acceptable level of 60 per cent of GDP,” Mr. Golding said.
“This will mean much needed fiscal space to support enhanced levels of public investment and public services, to support productive activities that have the potential to create employment, expand the tax base and grow the economy,” he added.
The Public Bodies Management and Accountability (Amendment) Act, was amended to strengthen the fiscal rules governing investment activities of public bodies.
The Bill states that investment by public bodies is to take place within the framework of a public investment management system, which is being established under an amendment to the Financial Administration and Audit Act, a companion measure to the Bill.
The Financial Administration and Audit (Amendment) Act provides for an escape clause to be effected with parliamentary approval, allowing for the suspension of fiscal rules for a specified period upon the occurrence of major adverse shocks, such as natural disasters, severe economic contraction, public emergency, or a financial sector crisis.
Government Senator Imani Duncan Pryce, while supporting the legislation, recommended that a sustained public education campaign be undertaken to ensure that Jamaicans understand the importance of managing the country’s budget prudently.
“These Bills represent a true game changer for Jamaica. The Bill is not just about the future, in terms of the next generation. It is a confidence builder, and (it is) an indicator (to the) private sector and public sector that this government is serious,” Senator Duncan Pryce said.
Opposition Senator Nigel Clarke, also supported the legislation. He noted that it distinguishes itself by dealing with how the government is going to reform itself “to ensure that we live in a prosperous country.”
The Government of Jamaica developed and submitted to the International Monetary Fund (IMF) in August 2013, a conceptual framework for the design of legally binding fiscal rules.
The framework aims to limit the annual fiscal deficit of the public sector (covering all fiscal activities), to achieve a reduction in public debt to no more than 60 per cent of Gross Domestic Product (GDP) by 2025/26.