Saturday 8 August, 2020

Parliament to debate bill to make BOJ a fully independent institution

Finance Minister Dr Nigel Clarke.

Finance Minister Dr Nigel Clarke.

Finance Minister Dr Nigel Clarke, on Tuesday tabled a long-awaited legislation in the House of Representatives that is aimed at making the Bank of Jamaica (BOJ) a fully independent institution.

The short title of the bill is the Bank of Jamaica Amendment Act 2018.

The Minister described it as a “very important bill that seeks to modernise the central bank, the Bank of Jamaica in keeping with international best practices.”

Clarke noted that “the central bank represents our collective savings and for any country a central bank is a crucial institution.”

He told the House that the bill seeks to, among other things, improve the governance of the central bank, “and very importantly it seeks to introduce transparency to monetary policy decisions and monetary policy actions of the central bank."

The bill also seeks to clarify the mandate of the central bank and to give the institution  autonomy and independence in law in the implementation of monetary policy.

Additionally, the bill also seeks to ensure that the central bank is adequately capitalised at all times, “with a dynamic capitalisation provision.”

It also seeks to have by law, measures of accountability and to pivot the accountability relationship from the Minister of Finance to the parliament.

Clarke argued that making the BOJ an independent institution is timely, especially based on our history.

“Jamaica has suffered over an extended period of time …over 40 years (during which) we have struggled with high inflation and over a particular period in the 1990s and the 2000s we had extremely high inflation that extended for a long time,” Clarke noted.

He added that this period was accompanied by high debt and periods of “chronic instability.”

The Minister also noted that during this period of instability, the fiscal component dominated the monetary resulting in a situation where the monetary policy of the central bank was to pursue policies that took into consideration the Government’s fragile fiscal position.

Clarke also told the House that making the BOJ fully independent from the political directorate will help to protect the recent gains made in stabilising the economy over two successive governments, a situation that all Jamaicans can be proud of.

Meanwhile, Opposition Spokesman on Finance, Mark Golding, said the legislation forms a plank in ensuring the sacrifice of Jamaicans to bring the country’s massive debt under control is not wasted.

A joint select committee of both houses of the parliament is to meet to peruse the bill before it is debated and passed into law.

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