NHT, NIS contributions from Government to be removed
Published:Tuesday | May 10, 2016 | 12:00 AMMcPherse Thompson
The Jamaican Government will be making significant reporting changes during fiscal year 2016-17, including removing the State's contribution towards National Housing Trust (NHT) and National Insurance Scheme (NIS) from wages and salaries of public sector workers.
According to the 2016-17 fiscal policy paper tabled in Parliament in April, the revised chart of accounts requires some adjustments of the components currently captured as wages and salaries.
Those adjustments are to be consistent with the International Monetary Fund's (IMF's) government finance statistics guidelines - an accounting framework developed by the multilateral to provide procedures for the compilation of fiscal accounts - and will change the value captured as wages and salaries, as well as the associated wages to gross domestic product (GDP) ratio.
NHT/NIS WAGE CHANGES
Among the changes will be the removal of the Government's employer's contribution towards NHT and NIS from wages and salaries, according to the fiscal policy paper.
"While these contributions, including the Government's portion of the cost towards health insurance, are considered part of compensation, the GFS (government finance statistics) does not include them in wages and salaries," it said.
The Government said that in light of those changes, during the first quarter of fiscal year 2016-17, the Ministry of Finance and Public Service will be consulting with key stakeholders, including IMF staff, regarding other classification issues in respect of wages and salaries which will have important bearing on the targeted wage-to-GDP ratio of 9 per cent.
The ministry said it has already started the legislative process to adjust the timeline for the 9 per cent of GDP wage ceiling. However, the outcome of the stakeholder consultations will help to guide the determination of a new timeline, which will be reported in the interim fiscal policy paper to be tabled in September 2016.
Beginning with fiscal year 2016-17 Budget, which is expected to be tabled in Parliament tomorrow (Thursday), the central government has adopted a revised chart of accounts. As a result, both the Estimates of Expenditure and Revenue Estimates for 2016-17 have been prepared and presented in the charts of accounts format, listing each account along with the account type and balance.
According to the fiscal policy paper, the revised chart of accounts establishes a set of standard accounting codes for revenue, expenditure, assets and liabilities to be used throughout the public sector in order to enhance the capability of Government to produce financial reports.
The revenue estimates presented in this fiscal policy paper utilises the usual format, consistent with that agreed under the IMF's General Data Dissemination Standards (GDDS), whose purpose is to assist member countries with regards to the publication of comprehensive, timely, accessible, and reliable economic and financial statistical data. It was established to guide countries that have, or that might seek, access to international capital markets in the dissemination of economic and financial data to the public.
However, during fiscal year 2016-17 there will be further consultations among stakeholders regarding possible adjustments in the metadata for the GDDS and fiscal reports for future fiscal policy papers.
WAGE BILL REDUCTION
According to the last memorandum of economic and financial policies issued by the IMF executive board by the previous People's National Party administration, the Government remains committed to the goal of reducing the wage bill to 9 per cent of GDP.
However, the December 2015 memorandum - the last one issued to the board - said that under current policies, including the relatively recent signed wage agreements, IMF staff estimates the wage bill to be 9.7 per cent of GDP in 2016-17.
Finance and Public Service Minister Audley Shaw has reaffirmed the current administration's unequivocal commitment to fiscal responsibility and prudence and to act decisively in managing fiscal risks.
"The minister recognises the importance of the GOJ (Government of Jamaica) taking deliberate actions to continue the process of implementing the economic reform programme with particular emphasis placed on bolstering the growth momentum," the paper said.
The IMF, pointing to a summary of central government operations appended to the memorandum, said it assumes a nominal wage bill increase in 2017-18 matching that in 2016-17, resulting in a wage bill ratio of 9.3 per cent of GDP.
"Achieving the wage bill target of 9 per cent of GDP would create additional fiscal space for growth promoting investments," the memorandum said.