Nigel Clarke | Economic independence in action … Government signs MOU with EPOC to extend domestic monitoring of Jamaica’s reform programme beyond IMF
The Government of Jamaica (GOJ), through the Ministry of Finance and the Public Service, signed a memorandum of understanding (MOU) with the Economic Programme Oversight Committee (EPOC), extending domestic monitoring of Jamaica’s economic reform programme beyond the end of the Precautionary Stand-By Arrangement with the International Monetary Fund (IMF).
EPOC was originally set up in 2013, shortly before Jamaica entered into the Extended Fund Facility (EFF) with the IMF, and it continued its role when Jamaica replaced the EFF with the Precautionary Stand-By Arrangement in 2016. Under these programmes, the GOJ agreed fiscal and monetary targets with the IMF along with policy commitments.
Within the context of these arrangements, EPOC provided an avenue for civil society to receive and review information from the Ministry of Finance and the Bank of Jamaica on the progress of implementation and achievement of these targets, which EPOC then reported to the public.
In November, Jamaica is expected to successfully complete the Precautionary Stand-By Arrangement with the IMF. EPOC’s tenure would naturally come to an end, as EPOC was set up to be co-terminus with the fund programme.
PUBLIC INTEREST BEST SERVED
However, the GOJ believes that the public interest is best served, at this time, by having a civil society-led domestic monitoring mechanism in place, that monitors performance with respect to the fiscal and macroeconomic targets set by the GOJ and the Bank of Jamaica (BOJ), until Central Bank modernisation, inclusive of independence in monetary policy implementation, is achieved and the Fiscal Council is operationalised.
As with the Fund programme, under this interim domestic monitoring mechanism, the GOJ and the BOJ will commit to a similar set of macro-fiscal targets that are consistent with Jamaica’s fiscal responsibility law, for a 12-month period in the first instance.
As with the Fund programme, the macro-fiscal targets will be publicly available and will be reviewed by the GOJ and BOJ quarterly and may be adjusted or revised semi-annually by the GOJ and/or BOJ in line with the tabling in Parliament of the annual Fiscal Policy Paper in February and Interim Fiscal Policy Paper in September, respectively. Such adjustments and revisions are constrained to be consistent with Jamaica’s fiscal responsibility law.
During the period of the Fund programmes, the Governor of the Bank of Jamaica has been a co-chair of EPOC and the financial secretary has been among EPOC’s members. This will change during the extension period. While EPOC will continue to have access to Bank of Jamaica and Ministry of Finance officials, we believe that fiscal and monetary transparency in a post-programme period is better promoted and achieved by having a clear and non-conflicting division between the setting and monitoring of targets. The central bank governor will therefore no longer co-chair EPOC.
AN INCREDIBLE JAMAICAN SUCCESS STORY
Over the past six and a half years, Jamaica’s debt has been significantly reduced, macroeconomic stability has become entrenched, economic growth has returned and there has been substantial growth in employment.
As I stated at Thursday’s signing ceremony, given where we are coming from, the macroeconomic gains that Jamaica has enjoyed over these six and a half years are an incredible Jamaican success story, recognised around the world. This success is wholly attributable to the effort and sacrifice of the Jamaican people and we owe it to the Jamaican people to preserve and build on these gains, even as we work to address other very important and pressing challenges.
As publicly confirmed by the IMF, the Precautionary Stand-By Agreement with the Fund has been characterised by Jamaican policy initiatives with IMF technical support. Jamaica is therefore well prepared for the post-programme period where we will domesticate and fully repatriate macro-fiscal monitoring and accountability, first through this interim MOU and then with the strengthening and establishment of permanent institutions. This is economic independence in action – we as a country, independently charting our own economic destiny, transparently, sustainably, responsibly, and anchored in our very own fiscal responsibility law.
This MOU extension with EPOC follows on the Government’s agreement with the IMF to keep its office in Jamaica for two years following the end of the Precautionary Stand-By Arrangement in November.
These decisions are a demonstration of our commitment to maintaining a credible and sustainable macroeconomic path, including a fiscal trajectory that is consistent with our fiscal responsibility laws, long into the future that provides the foundation of economic opportunity for the current and future generations.
- Dr Nigel Clarke is minister of finance and the public service and member of parliament for St Andrew North Western. Email feedback to firstname.lastname@example.org