Unfinished business

As the clock winds down on Dr Nigel Clarke’s tenure as finance minister, opinions are divided on which critical decisions he must seal before he takes his exit.

The 52-year-old, credited with deepening Jamaica’s macroeconomic stability since his appointment in March 2018, will transition to the role of deputy managing director at the International Monetary Fund (IMF) on October 31.

His departure comes at a pivotal moment, with urgent issues like public sector reform, a revised Budget to cover the multibillion-dollar Hurricane Beryl recovery effort, projected economic downturns, rising living expenses, and an upcoming national election all on the horizon.

Prime Minister Andrew Holness has identified a successor, but is yet to tell the public who that is.

Meanwhile, public sector unions, economists, and analysts are weighing in on what Clarke can and should accomplish in the weeks before he leaves his post at Heroes Circle in downtown Kingston.

Dr Wesley Hughes, consulting economist, former financial secretary in the Ministry of Finance and the Public Service (2009-2012):

There are two types of transitions – one with a new government, in which case, you have a long notification and then there’s a Cabinet reshuffle and you have a new minister coming on. In both instances, however, you have public servants being required to present briefs to the new minister on all the relevant issues to be dealt with. These could be immediate, almost burning-type things or important-but-not-so-imminent ones, and then you have the medium-to longer-term issues.

In the present circumstances, where you have a new minister emerging just before Budget call, that’s going be a very important moment because the minister will have to respond to that emerging set of issues around the new Budget to be formulated. The Budget call comes at the end of October into November. The new minister will have very little time to relax or play his/her eyes in. They’ll have to stand, facing bouncers and quick deliveries from the very get-go.

Top of the list for a new finance minister: The day-to-day issues to do with expenditures, budgets, pension payments, all these ongoing payments, and if there are issues to do with revenue shortfall or flows, then they will have to be addressed. I can’t think of anything dramatic. The recent hurricane would present additional difficulties for the Government in terms of expenditure. Any gaps in the revenues will have to be addressed fairly quickly to maintain the projections around the deficit and to carry the ongoing debt reduction strategy forward.

Things Clarke will have to finish: It would have to be things that require timelines being met. I don’t think the minister would be undertaking major new policy decisions or shifts before a new minister comes in. That’s a judgment call. If there are priorities to be addressed, the minister wouldn’t necessarily want to leave things hanging, especially given that it’s not a change of administration; it’s a change of personnel.

St Patrice Ennis, president, Jamaica Confederation of Trade Unions, which includes 11 unions representing roughly 100,000 government workers:

Of immediacy and most imminent is the conclusion of the public sector negotiations, which entail the compensation review/restructuring (talks were scheduled for August 30). The outstanding items include mileage, travelling, passenger mileage, subsistence allowance, overtime policy, transition of contract workers to regular state of employment, and the most salient of them, I would deem it to be, the increment. It is the item that affects everybody.

In this round, we are trying to include those persons who normally wouldn’t get increments such as those who are temporary and those who are on contract. Increment would normally be granted to persons based on their performance or improvement in their qualifications, but because it has been suspended by the Government since 2022, it would be fair to make everybody eligible. That is the one that I would give priority attention to.

We are mindful that many of these things are not included in the Supplementary Budget and we’re also mindful that Hurricane Beryl was with us not too long ago. Its after-effects are still causing some problems and that has to be factored in any form of budgetary considerations that the Government is going to have.

Phillip Ramson, president, Jamaica Chamber of Commerce:

The Chamber of Commerce has been in dialogue with Minister Nigel Clarke from the beginning of the year on some of our tax concerns, in particular, GCT (General Consumption Tax). There is an advance GCT on imports ... that we pay 20 per cent GCT on the import of goods when we can only charge 15 per cent on the sale of goods. That was a temporary addition that should have been removed.

We also spoke to him about the removal of GCT and duties on digital devices to help make them more affordable because that is important, in particular for people to have devices for schools.

We also spoke to the minister about the removal of the dividend tax (10 per cent); people who invest their money receive a dividend … . You’ve already paid a tax on that money when you earned it and you shouldn’t be paying a tax on dividends.

When he gave his Budget in March, he spoke about the removal of GCT on raw foodstuff, but it is still on the importation of raw foodstuff. That hasn’t been dealt with as well. It’s only removed from local ones, but there are imported raw foodstuff that are still paying GCT.

We’d love to see if he could deal with some of these things. We were grateful when he dealt with the threshold for income tax. We did also ask him to regularise it because it’s 25 per cent income tax up to a certain bracket, and then I think if you earn over $6.5 million, it’s 30 per cent income tax so, we had asked if that could be regularised to 25 per cent no matter what the income is once it’s up to certain level. So, a few things we’d love to see the minister deal with because my concern is, if he’s not going to deal with it, it will be a long time before they get on the agenda for someone else.

Keenan Falconer, economist:

Dr Nigel Clarke will want to bequeath a legacy of institution building and entrenching the gains of macroeconomic and fiscal stability achieved over the years, so before he demits office, I believe one of his priority areas will be ensuring the acceleration of the operationalisation of the Independent Fiscal Commission and the establishment of the Fiscal Research Institute at The University of the West Indies, Mona.

I think he would also be keen on ensuring the completion of certain legislative reforms, in particular the Large Scale Projects and Pioneer Industries Act (LPPIA) to facilitate further major investments in the economy, as well as regulations that will see the enhancement of consolidated supervision by the monetary authorities, which is important for financial sector stability.

Finally, Dr Clarke will certainly want to see to the implementation of the reverse tax credit scheme for low-income earners as a tangible demonstration of the fruits of the administration’s fiscal policy direction.

Donovan Wignall, president of the MSME Alliance:

There are negotiations with the public sector that are incomplete. The whole thing with the transport sector; the containment of inflation in the four to six per cent range; the control of the slide of the dollar, which is very important but also impacts inflation.

The Budget, I think we’re something like $40-odd billion short on the Budget, he was working on that; and various other things that were work in progress … . [But] those things are things that won’t be complete between now and October 31 anyway.

Dr Nigel Clarke leaves a team of competent people and it’s not like everything was in his head. It was a team effort, and if he goes, there is still that commitment to Jamaica. Whatever he has to offer in terms of consultation, his thoughts on how we get to the finish line as far as those projects are concerned, I’m sure he’s still going to be available. So, I wouldn’t panic.

Post-haste, the Government needs to find somebody just as competent or near as competent as Clarke to appoint as minister of finance.