Donald Harris, professor of economics at Stanford University, has recommended, in strong terms, that Jamaica divorces the portfolio of development policy and planning from the Ministry of Finance (MOF), saying their comingling was a recipe for failure and disaster if not subjected to proper control.

"To avoid this outcome and achieve better balance in the economic policy mix, the legitimate interests of the MOF and of the BOJ must be counterbalanced by a separate institutional leadership of the development effort," said Harris.

He proposes instead the formation of a separate and distinct Ministry of Development and Planning.

In the current structure, the portfolio falls to Audley Shaw, minister of finance and planning.

Reduced cabinet positions

The new ministry, Harris proposed as he addressed last week's economic forum hosted by the Jamaica Chamber of Commerce, should absorb all the functions of development and planning scattered in other agencies and ministries, helping to reduce the cost of Government and also achieve the desired goal of a reduced number of cabinet positions.

"To subsume these matters entirely within the confines of the budget process, a process which merits full attention on its own terms and must itself be subordinated to policies and priorities determined elsewhere, is bound to result in confusion and dismal failure such as we have witnessed," he said.

Already the Government is currently in a restructuring mode which is geared at improving efficiency and reducing the cost of operation.

In fact, the prime minister noted that it cost in excess of $157 billion just to maintain the salaries, pay utilities and rent for office space for Government activities.

Managing the 'money bills'

According to Harris, an important feature of the proposal is that by restoring the Ministry of Finance to its proper role of managing the 'money bills', it will seek to put the MOF on a stronger footing to achieve the imperative of fiscal discipline.

To maintain the current status quo, he suggested, is to perpetuate future bouts of debt explosion.

Jamaica's total debt currently stands at $1.3 trillion, with a widening fiscal deficit. At the end of August, Government spending had outpaced revenues and grants by $60.5 billion for the fiscal year to date.

Just weeks ago the deficit target was also revised, moving it up more than three points from 5.5 per cent to 8.7 per cent in the face of low revenue inflows and high debt-servicing outflows.

"The Ministry of Finance must be put back to do its job of balancing the budget, reigning over statutory bodies, making sure they have balance books, and are not draining from government and not replenishing it," Harris noted.

"The MOF must then be made to operate under strict requirements that the budget must 'add up', and the adding up verified by an independent office, that is the Office of the Auditor General."

sabrina.gordon@gleanerjm.com

Ministry of Finance. - file