What over­sight for standby ar­range­ment?

Jamaica Gleaner - - OPINION & COMMENTARY -

ONCE THE staff agreed its spe­cific con­tours, it was al­ways a mere for­mal­ity that the In­ter­na­tional Mone­tary Fund’s (IMF) board would ap­prove Ja­maica’s new standby ar­range­ment with the Fund, which Prime Min­is­ter Andrew Hol­ness dis­closed last week­end.

This agree­ment, which re­places the nearly ended, and suc­cess­ful, Ex­tended Fund Fa­cil­ity (EFF) will put at Ja­maica’s dis­posal US$1.7 bil­lion, which it can call on in the event of ex­oge­nous shocks such as a sharp up­ward swing in oil prices or nat­u­ral catas­tro­phes that threaten the coun­try’s macroe­co­nomic sta­bil­ity.

The Fund’s over­sight of the Gov­ern­ment’s quan­ti­ta­tive and qual­ity man­age­ment of the econ­omy will be less in­tense un­der this pro­gramme than the last per­for­mance re­views – which will now be half-yearly rather than quar­terly – but that doesn’t mean it will come with­out con­di­tions. We will, how­ever, know what the spe­cific per­for­mance cri­te­ria are when Ja­maica’s for­mal let­ter of in­tent to the Fund is pub­lished, which should be shortly.

There are some very im­por­tant things that we do know. Not least of these is that Gov­ern­ment’s dili­gence notwith­stand­ing, the pre­vi­ous agree­ment was suc­cess­ful, in no small part, be­cause of the work of the Economic Pro­gramme Over­sight Com­mit­tee (EPOC), un­der the lead­er­ship of Richard Byles, CEO of the Sagi­cor Group. Ja­maica met the tar­gets in 14 quar­ters be­fore the EFF was su­per­seded by the standby ar­range­ment.

EPOC was, in sev­eral ways, unique. It was largely the idea of the Ja­maican bank­ing sec­tor, which, hav­ing resched­uled huge chunks of the Gov­ern­ment’s debt, wanted to be sure that they would be re­paid their money. Its mem­ber­ship in­cluded the pri­vate and pub­lic sec­tors, as well as rep­re­sen­ta­tives of the trade union move­ment. They had ac­cess to gov­ern­ment data.

There are two other crit­i­cally im­por­tant rea­sons that made this unique ex­per­i­ment suc­cess­ful. One is that Richard Byles pro­vided out­stand­ing and coura­geous lead­er­ship. Even when he was at­tacked by Aud­ley Shaw, the cur­rent finance min­is­ter, who was then in Op­po­si­tion, as a pro­pa­ganda mouth­piece for the pre­vi­ous ad­min­is­tra­tion, Mr Byles didn’t flinch.


The sec­ond rea­son was re­lated to the first. EPOC was trans­par­ent. It pro­vided data and in­de­pen­dent anal­y­sis on the econ­omy and the prospects of meet­ing the IMF tar­gets, on a reg­u­lar ba­sis, thereby, we be­lieve, pro­scrib­ing any in­cli­na­tion by the ad­min­is­tra­tion to cook the books. It helped, of course, that the banks funded EPOC’s op­er­a­tion, al­low­ing them to put their find­ings in the pub­lic do­main.

We have pro­vided all this back­ground out of, thus far, slight un­ease, with the Gov­ern­ment’s con­fig­u­ra­tion of cart and horse. We fear that they be off and run­ning, with the horse in the rear.

The Gov­ern­ment is com­mit­ted to some kind of over­sight group for the standby ar­range­ment and the per­for­mance of the econ­omy as a whole. What is con­cern­ing is that the pub­lic doesn’t yet know what this over­sight looks like, what pre­cisely it will mon­i­tor, who are its prin­ci­pals, and, espe­cially, who will be its leader. There is an as­sump­tion that its man­date will be broader than EPOC, mon­i­tor­ing the per­for­mance of the wider econ­omy, rather than the cri­te­ria laid down in the new let­ter of in­tent.

This news­pa­per has no ob­jec­tion to that broader ap­proach, which seems to be within the re­mit of Prime Min­is­ter Andrew Hol­ness’ Economic Growth Coun­cil, chaired by banker Michael Lee-Chin. We, how­ever, like oth­ers, in­sist that there is need for sep­a­rate, spe­cific, and timely over­sight of, and re­port­ing on, the fis­cal ac­counts, where gov­ern­ments are of­ten dis­posed to do­ing mis­chief. The lead­er­ship of that group also needs to be publicly vet­ted for us to be cer­tain that he/she comes at least close to the bench­mark set by Richard Byles.

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