Economic independence will end dependence on creditors — Clarke

Senior staff reporter

Wednesday, May 16, 2018

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In laying the foundation for the creation of a fiscal council to oversee government spending, Minister of Finance and the Public Service Dr Nigel Clarke said Thursday that Jamaica's economic independence will require “long-term thinking”.

“Economic independence is not the freedom to do whatever we want; It is about implementing the right economic policies for Jamaica without prompting from anyone,” he told Thursday's fiscal responsibility presentation to finance sector stakeholders at Jamaica Pegasus in New Kingston.

“Economic independence is not an absence of interdependence. Jamaica is a small, open economy where trade in goods and services as a percentage of GDP is very high, at over 80 per cent. There, will always be interdependence,” Clarke admitted.

“Economic independence, however, is among other things, about not being dependent on creditors for our basic needs. It requires that policymaking does not just consider today, but it also considers tomorrow. Economic independence requires long-term thinking,” he stated.

“Economic independence also requires a domestication of the policymaking and consensus-building processes and requires us to pursue policies that result in Jamaica having greater flexibility and an increased ability to address priority areas, as determined by Jamaicans, with responsibility and without compromising that very independence,” he noted.

Thursday's function was to inform the country of cabinet's approval of the proposal for a fiscal council comprising financial experts to provide oversight of the government's fiscal policy and its application.

Clarke explained that Fiscal councils are “permanent, independent, non-partisan institutions staffed by competent, experienced and technically proficient persons that help promote economically sustainable fiscal policies across political cycles, and are created by legislation”.

“Since the advent of the global financial and economic crisis of 2008/2009, fiscal councils have proliferated as countries seek to implement measures to restore fiscal credibility,” he said, noting that the establishment of a fiscal council, can be constructed as an enhancement of the partnership models Jamaica already has, and offers several advantages.

But he noted that he had revealed economic independence as a priority for his Administration at the Ministry of Finance and the Public Service from his first public address as a member of the Cabinet.

“In my first speech, I outlined the view that a variety of interests with sometimes-conflicting agendas seek to influence policy — sectoral interests, labour interests, capital interests and even generational interests, I said.; I should have added media interests too. I characterised this as normal,” he said.

“Policymaking, therefore, requires a balancing of these interests. But, as we seek to balance interests there has to be an overarching vision that establishes priorities and frames decision-making,” he said.

“For the Ministry of Finance, in an Andrew Holness administration, the organising principles are the pursuit of economic independence, the expansion of economic opportunity for all — that is economic growth, and the protection of the vulnerable,” he noted.

These priorities are sometimes in conflict with each other as pursuing one can work against the other. As a result, the policy options to support economic expansion have to be balanced by the mandate to secure our economic independence, even as the urgency of economic independence has to be moderated by the need to protect the vulnerable.

“However, these priorities can be made to complement each other: Our prospects for economic independence increase with sustained expansion of the economy, while protection of the vulnerable preserves the social capital required to pursue both.

“So, the organising principles are: pursuit and maintenance of economic independence, expansion of opportunity for all, and protection of the vulnerable,”he said.

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