Careful with the goodies

Jamaica’s slowing economy has triggered a warning from business executive Keith Duncan to temper the rollout of goodies and promises ahead of the general election next year.

Duncan, chairman of the Economic Programme Oversight Committee (EPOC), which yesterday wrapped its 11-year mandate, said significant restraint must be exercised going forward.

“Achieving the growth projection’s fiscal balance targets and the debt reduction strategies will become challenging and will require significant political will, particularly as the country is in the midst of an election campaign leading up to the general election scheduled for next year,” said Duncan at the final EPOC quarterly press briefing at the Ministry of Finance and the Public Service yesterday.

“You know the goodie bag always rolls out in the election season. We’re going to have to be very careful how we manage that goodie bag going forward,” he said, adding “We have to manage ourselves so that we don’t derail.”

Jamaica’s growth projections for financial year 2024-25 have been reduced from 1.8 per cent to 0.2 per cent by the finance ministry in the Interim Fiscal policy paper tabled in October.

GDP growth is projected in the range of -1.5 per cent to 0 per cent for 2024-25 by the Planning Institute of Jamaica, while the finance ministry and the Bank of Jamaica (BOJ) have projected 1.9 per cent and 1 to 3 per cent growths, respectively, for 2025-26.

‘FRAUGHT WITH UNCERTAINTY’

Still, EPOC noted the slowdown in the Jamaican economy to 0.2 per cent in the April to June 2024 quarter which it said was impacted by a below budgeted growth in visitor arrivals and the lagged effect of the BOJ’s tight monetary policy which slowed domestic demand and activity. It said this was compounded by weather systems, including Hurricane Beryl in July.

As a result, Duncan said EPOC is cautious regarding projected growths as the pathway is “fraught with uncertainty”.

His assessment comes against the backdrop of Prime Minister Andrew Holness’ announcement of a $20,000 giveback to Jamaicans who are not captured in any system, and falling outside of a safety net.

Holness, the leader of the ruling Jamaica Labour Party (JLP), while speaking at the party’s 81st annual conference in November, said there are Jamaicans who have not been fully captured in the Government’s ‘We Care’ giveback programme who should also benefit from the cashback being enjoyed by others through the reverse income tax credit initiative, now under way.

That programme currently benefits Jamaicans earning $3 million or less in annual income.

Holness said those being targeted now are persons not registered on the Programme of Advancement Through Health and Education (PATH), not captured in the tax system through employment, or are not currently on Jamaica’s national social pension or National Insurance Scheme (NIS) system.

“These persons would be outside our safety net programmes, 18 years or older, unassisted and unregistered vulnerable population. As citizens, they too should benefit from the giveback. Starting in February, we will open applications which will involve a needs assessment process for a one-off cash grant of $20,000,” he said.

VULNERABLE MUST BE PROTECTED

Asked whether EPOC foresees any risks to the country’s economic programme with the giveback scheduled for February, Duncan said there are some “uncertainties” next year but noted that the vulnerable population must be protected.

“Where the numbers are right now and in relationship to our targets, we had significant inflows from the securitisation effort and tax revenues are slightly ahead of budget up until October. However, we do see that there are some uncertainties on the horizon over the next six months or so,” said Duncan.

“However, we do believe that you have to deal with the vulnerable because what we have seen over the last number of years is a significant increase in inflation. Purchasing power has been reduced significantly and really and truly if you’re not working for the taxpayers of Jamaica and the most vulnerable people in Jamaica, who are you working for?”

He added, “We may need to prioritise them and then you might need to make some reallocations if you haven’t. But if you can protect the most vulnerable in our society, that is where I would prioritise.”

Yesterday’s briefing marked the end of EPOC’s mandate to monitor Jamaica’s economic reform agenda, providing oversight of the country’s commitments under its agreements with the International Monetary Fund and subsequently the Government’s economic reform programme.

With EPOC’s dissolution, the Independent Fiscal Commission (IFC) is set to assume responsibility for maintaining oversight of Jamaica’s adherence to fiscal responsibility laws. The IFC’s operations will begin on January 1, 2025, under the Independent Fiscal Commission Act.

Seasoned fiscal economist and career public servant Courtney Williams has been sworn in as fiscal commissioner.

Duncan is to chair the advisory committee.

kimone.francis@gleanerjm.com