We are shocked that an administration in which Mr. Audley Shaw holds the post of Minister of Finance would ever contemplate the enactment of legislation to reopen the door to the use of deferred financing without parliamentary scrutiny.

Certainly, not after the crusade he led to rein in the practice of financing off-fudget expenditures by loans, deferred financing, the proceeds of which are spent before they are approved by Parliament.  But this is exactly what the government seems to have done by the amendments to the Financial Administration & Audit (FA&A) Act passed in the Senate two Fridays ago.

Worse, it took this unbelievable step just a few days before the IMF Board was due to consider an Agreement that contains conditionalities that require the introduction of tough rules about the management of public finances.  Among these rules is a Fiscal Responsibility law, which is meant to reverse the unsustainable rate of government borrowing and which the IMF has insisted be passed no later than the end of next month.  This law is also to ensure transparency and accountability in how public funds are spent.

But from our reading, amendments to the FA&A Act would do the opposite, as agreements for deferred financing entered into in the future would no longer be subject to the controls provided for by the Act, which require among other things, that they first be approved by Parliament.  Could this really be what is intended, or was there an error in the drafting, as was pointed out by Senator Mark Golding?  If so, how could the error have slipped through the Lower House?  And why wasn’t it corrected in the Senate?

What we find most disturbing though, is that the amendment was forced through the Parliament in the very week when the Jamaica Debt Exchange (JDX) initiative was being consummated.  That initiative demanded substantial sacrifices by Jamaican investors, pensioners included, in return for which the government gave what we took as solemn undertakings to observe full transparency in the country’s financial affairs.  As important, commitments were given to cut back public spending and balance the Budget so that government could drastically curtail new borrowing.  For if this is not done the sacrifices made would be for naught, as Jamaica would soon return to “a position of insolvency,” which is what necessitated the initiative in the first place. Legislation, which leaves an opening for the return to deferred financing and moreso without parliamentary approval, is therefore in stark conflict with the terms of the IMF agreement and the commitments given in relation to the JDX.

Lest our concern be dismissed as alarmist, we would remind the citizenry of the public pronouncements of at least one minister that he plans to have private developers build public facilities such as schools that would then be leased to the government.  Were such a scheme to be pursued where private developers borrow money to finance these projects, and lease payments by the government are in turn fixed to guarantee repayment, then this would be just another form of deferred financing.  If the amendments were to allow for such a plan then trust would have been breached again.

Except for the views appearing above, articles in this newspaper do not necessarily represent the opinion of the newspaper.