Met conditions for not being a part of Jamaica’s public sector

Durrant Pate/Contributor

The Auditor General’s Department (AGD) has certified the Bank of Jamaica (BOJ) and the Jamaica Mortgage Bank (JMB) not being a part of Jamaica’s public sector.

This follows an assessment done by the AGD at the request of Finance and the Public Service Minister Dr Nigel Clarke for the department to determine whether these two entities carry out functions primarily of commercial nature and hence meet the criteria for certification as not being part of the specified public sector. This request was made on August 22, 2022.

In carrying out the assignment, Auditor General Pamela Monroe Ellis, who heads the AGD, utilised the annual reports and audited financial statements provided by the finance and public service minister and, where necessary, consulted other pertinent published documentations in arriving at her assessment.

Certifying both entities

At the end of her assessment, the Auditor General certified that the BOJ and JMB primarily carry out functions of a commercial nature and as such meet the criteria of not being part of the specified public sector. The criteria for certification of public bodies as not being part of the Specified Public Sector consist of four standards namely: (1) Fiscal Independence (2) Independence of Human Resource Decision-making (3) Financial Standards, and (4) Transparency and Governance.

In her 19-page report tabled in parliament earlier this week, Monroe Ellis outlined regulations which require the AGD “to review the functions of the JMB and BOJ to determine whether certification still hold”.

She added: “Further, based on Regulations 14(2) of the FAA (FRF) Regulations I may be required in every third year thereafter, to review these entities along with the list of public bodies provided by the Minister for certification.”

However, Monroe Ellis highlighted that, if the JMB is privatised within the three-year period, such review would not arise. Privatisation of the JMB has been on the drawing board for the last two years.

BOJ’s assessment

In its assessment of the BOJ, the AGD assessment confirmed that the BOJ’s policy rate is independently determined as per the BOJ Act.

The AGD also indicated that the BOJ has not, in the three preceding years, received any government subsidy or financial support from the Government or preferential tax treatment.

In addition, criteria that the Government has no outstanding financial guarantees with the BOJ has been met. Also, staff positions of the public body are not included in the Civil Service Establishment. Further, the BOJ, as a public body, exercises autonomy over its employment decisions (such as hiring and termination) and annual reports, including audited financial statements, have been submitted in accordance with the Public Bodies Management and Accountability Act.

The BOJ has met the standard that, as a public body, it has on average over the three preceding financial years, recorded a positive net profit after tax on a stand alone basis or on a consolidated basis.

The standards have also been met where the average long-term debt to equity ratio of the public body over the three preceding financial years, is no more than where the long term debt due over a period that is longer than one year. Also, the positive working capital and current ratio of the BOJ is at least 1.2, where current ratio means current assets divided by current liabilities.

JMB’s assessment

Consistent with full cost recovery for public bodies that operate in a regulated industry, based on the average price over the three financial years, this standard has been met by the JMB. In addition, JMB has demonstrated self-sufficiency in expense coverage ratio and net profit margin.

The AGD confirmed that JMB has not in the three preceding years received any government subsidy or financial support from the Government or preferential tax. Also, the Government has no outstanding financial guarantees in respect of this public body.

The criterion of the independence of human resources decision-making, staff positions of the public body are not included in the Civil Service Establishment and the JMB as a public body exercises legal autonomy with regard to its employment decisions (such as hiring and termination) have been met.