Thursday 19 September, 2019

Government to establish independent fiscal council

The Government, with Cabinet’s recent approval is moving to establish an independent fiscal council.

This announcement was made by the Minister of Finance, Nigel Clarke at a specially convened press conference held at the Jamaica Pegasus Hotel in Kingston.

“The Cabinet has endorsed the concept of an independent fiscal institution such as a fiscal council and the government has procured the services of experienced international experts in this area who can help us in its design,” said Clarke.

He went on to explain that fiscal councils are permanent, independent, non-partisan institutions, staffed by competent, experienced and technically proficient persons that help to promote economically sustainable policies across political cycles and are created by legislation.

The Minister of Finance pointed out that since the advent of the global financial crisis of 2008/09, fiscal councils have proliferated as countries seek to implement measures to restore fiscal credibility.

“The establishment of a fiscal council which can be construed as an enhancement of the partnership experiment or model that we have benefited from, offers several advantages. Fiscal councils foster greater transparency around fiscal policy by having legislative access to economic data. They have sufficient analytical capacity and provide unbiased advice and information to the public.

“Fiscal councils have deep democratic accountability as policy makers have to maintain credible policies or explain what might appear to be deviations. They alter the disincentive structure in the political economy by raising the political cost of unsound policies. Conversely, fiscal councils reduce the political cost of complying with fiscal rules. Fiscal councils help to keep the public and policy makers informed and educated so as to reduce the propensity to succumb to fiscal illusion where the electorate and business people believe that government have more resources than they let on,’’ said the Minister of Finance.

Minister Clarke stressed that the fiscal council has to be non-partisan in all its activities. He added that it must be clearly understood that the fiscal council members are not policy decision makers nor should they try to be. They only offer a second opinion. They are not tsars but influence the public debate indirectly through the media impact of their reports.

The fiscal council membership will be made up of trade unionists, the private sector, the financial sector, academia, youth, the Opposition and civil society. 

 

 

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