Minister without Portfolio in the Ministry of Finance and the Public Service, Senator Don Wehby, is optimistic that the reform measures currently being pursued by the Government, will yield economic growth for Jamaica.
He was outlining the policy reform measures, for which the administration has secured US$100 million from the Caribbean Development Bank (CDB), during the signing of the agreement at his Ministry on Monday (Feb. 2).
The policy-based loan will increase the support being provided by the Inter-American Development Bank (IDB) and the World Bank in the area of policy reform, and support the Government's fiscal sustainability initiatives.
The Minister noted that the loan signing was part of the culmination of discussions the administration, through the Ministry, has had with multilateral funding agencies, which have resulted in consensus on six areas of focus he considers important in terms of the reform process.
The first area of focus was to control public sector balances and debt. He said that often it is not recognised that there are a number of entities in central Government, including the Sugar Company of Jamaica (SCJ), accumulating significant losses which are not reflected in the budget process for the year.
"Last year in our budget, we had to take on approximately $16 billion worth of debt on central Government, which means that taxpayers are going to be responsible in terms of servicing the debt. What we are saying in this reform process is that, we are going to have increased transparency and accountability by these public bodies, so any accumulation of debt in their accounts will be recognised very quickly, and the appropriate actions can be taken to solve the problem," the Minister outlined.
Another area of focus, Senator Wehby named, was the rationalisation of public bodies. He pointed out that the administration has commenced divestment of assets which do not form part of its core holdings.
"Air Jamaica, as you know, is in the process of divestment, (as well as) the Sugar Company of Jamaica. While we have a slight hiccup because of the world financial market, it is (still) our intention to divest the Sugar Company of Jamaica, and there are other assets that the Government has that we will be divesting," he stated.
Effective management of the public sector wage bill is another area which he said will be pursued.
Senator Wehby alluded to a diagnostic study of Jamaica's debt done by the CDB, which noted that public sector wages amounted to between 10 per cent and 12 per cent of Gross Domestic Product (GDP), while the international benchmark is approximately eight per cent. He said that in addressing the wage bill, "we are not talking about massive redundancies, in any way. We are talking about,... ensuring that our public sector can become much more efficient."
Senator Wehby also highlighted the need to significantly improve financial management and the budget process in central Government. He underscored the need for an information system that is fully integrated within all Ministries, in order to facilitate timely and accurate reporting of the budget process.
The Minister also advised that tax reform, aimed at improving and increasing revenue collection, is number one on the Ministry's agenda.
"We have had several meetings on tax reform, and the whole issue is to simplify our tax system and make it more equitable," he said.
He pointed out that the nation could expect announcements on significant tax reforms in the upcoming Budget Debate.
Senator Wehby said that the other focus would be on increasing growth and competitiveness. He added that the administration has had several discussions regarding the level of debt which, he lamented, is in excess of 100 per cent.
"The solution to our problem of debt is actually to grow the Jamaican economy, (but) we cannot grow (it) with bureaucracy. As the Prime Minister said, we need to roll out the red carpet and roll in the red tape, and that is our intention for the next budget process," he explained.
"So I think (that) with those six reform measures, (though) we're going through a difficult time in Jamaica now (and as) markets go up and markets go down, if these (measures) are implemented very quickly, when the markets go up again, Jamaica will be in a good position to take advantage of growth in our economy," he expanded.
He said that the US$100 million CDB loan facility will greatly assist the administration in effecting growth.
