Jamaica’s Economic Program Oversight Committee (EPOC) is hailing two recent legislative initiatives by the Government of Jamaica (GOJ), designed to help the country to manage the current COVID-19 crisis. 

The first initiative cited by EPOC was the Senate’s approval of a bill on December 4, aimed at granting the central bank greater independence to maintain price stability through inflation targeting.

This legislation, EPOC contends would empower the Bank of Jamaica with unprecedented operational independence and establish a monetary policy committee to deliberate policy and actions, all with the aim of removing political influence and adding transparency to operations and policy decision-making processes.

The second initiative, cited by EPOC, is legislation to establish an independent Fiscal Commission in Jamaica, reporting to parliament. This Fiscal Commission will have the responsibility of monitoring compliance with fiscal rules under the government’s fiscal responsibility framework.

Finance Minister, Dr Nigel Clarke, who tabled the legislation in parliament, recently said: “The fiscal commission will be the guardian and interpreter of Jamaica’s fiscal rules, monitoring compliance with these fiscal rules, reporting on fiscal outcomes and keeping the public informed by providing independent analysis on fiscal policy developments.”

EPOC at its quarterly news briefing on Tuesday (December 15) described both legislations, as a step in the right direction, as Jamaica seeks to rebound from the downturn in the economy caused by the global pandemic.

EPOC expressed cautious optimism that new legislative and monetary measures will help bring the country through the COVID-19 storm.

Credit growth

EPOC reported on lending activity through the pandemic, which registered a 12.2% annual growth in total loans and advances extended by deposit-taking institutions to the private sector at the end of September. This was lower than the 13.3% growth at the end of June and 15.6% at the end of September 2019.

This slowdown was mainly reflected in loans to consumers, which grew by 9.6% at end-September relative to growth of 15.3% at end-February 2020 (pre-COVID). Loan growth to the productive sector in September, however, “remained fairly resilient” at 15.7% compared to 16.0% in the same month of 2019.

Macro-economic fundamentals remain strong

EPOC Co-Chairman, Keith Duncan reports that while times remain uncertain, Jamaica’s macro fundamentals remain strong. He argues that while COVID-19 continues to impact and disrupt trading partners, there are a number of positive indicators occurring in the local economies. He pointed to the tourism industry, which is on the rebound.

Duncan highlighted that while tax revenues are down, other inputs have increased and the government looks to avoid any immediate difficulty. EPOC says tax revenues collected in the fiscal year were around $262 billion, which is J$55.9 billion less than in the prior year.

However, the government is projecting it will take in $168 billion between January and March 2021 – a modest improvement over the period in 2020.

Duncan contends that the government only has room for about J$804 million to close out the financial year at March 31, 2021, meaning “the government basically has to run a balanced budget” until then, with no new extraordinary expenditures.