Editorial | We, too, back a new-style EPOC
Peter Phillips, in his recent address to the Private Sector Organisation of Jamaica (PSOJ), gave an important, but little-noticed policy commitment that shouldn't await the advent of another People's National Party administration. Dr Phillips endorsed Richard Byles' suggestion for a standing EPOC-style oversight arrangement for Jamaica's economic and social affairs, but went further by recommending that the proposed body be entrenched in legislation, with independent reporting status, including the right to send its findings to Parliament. This newspaper believes that the idea should go even deeper. The body should also conduct analysis of the economy and provide scorecards of likely outcomes.
The Economic Programme Oversight Committee, it is recalled, was established as a complement to the three-year extended fund facility Jamaica signed with the International Monetary Fund (IMF) in 2013. Domestic financial players wanted it. They had rescheduled hundreds of billions of dollars of government debt and wanted to ensure that they be repaid under the new terms and avoid a future, full-fledged default.
Given Jamaica's history of failing to complete IMF programmes, the financial institutions felt that the best way to ensure success and protect their money was for the monitoring of performance against targets by a quasi-independent body and the early flagging of dangers. The Government would be close-marked. Hence, EPOC, with Mr Byles, then CEO of Sagicor Financial Group, as its chairman, and members from the public and private sectors and civil-society groups, was established. It issued quarterly reports on Jamaica's compliance with the IMF targets.
Everyone agrees that the model was a success. Said Mr Byles at his recent induction into the PSOJ's Hall of Fame: "Jamaica made a remarkable turnaround, moving from being locked out of international financial markets due to a lack of confidence in our capacity to manage our own affairs, to becoming the poster child for the IMF."
EPOC has continued, with new leadership, as part of the standby agreement that Jamaica has with the Fund, but lacks the profile of its previous incarnation, although IMF programme remains on track. However, the agreement with the IMF ends in two years and with it, the Fund's monitoring of Jamaica.
Byles believes that with this eventuality, Jamaica needs "continued strong oversight", having "come too far and paid too high a price to make any mistakes in the future". That is why he wants a long-term commitment to the EPOC arrangement.
Peter Phillips, who was the finance minister during the first half of EPOC's life, agrees. In his PSOJ speech, he recommended that "we incorporate a structure similar to EPOC in our legislative framework to ensure that after the IMF programme, we maintain our commitment to macroeconomic prudence and fiscal responsibility".
The body, with members independently appointed by stakeholders, would have access, he said, to fiscal information, perhaps via the auditor general, from which they would give reports. What neither Mr Byles nor Dr Phillips did was to outline the specific tasks of the body, although early warning signals that the fiscal accounts are off-track would be important.
Room for engagement
We, however, believe that there is room for a more robust engagement for such a group. For instance, the Auditor General's Department has the job of reviewing the finance ministry's periodic fiscal-policy papers, a job for which this newspaper does not believe the Auditor General's Department is appropriately equipped.
The Auditor General's Department is largely an accounting/auditing agency that ensures that rules are followed, the Government gets value for money, and the public resources are not wasted or stolen. Its reviews of the fiscal policy reports follow the plot well, but are absent rigorous analyses of the cause and effect of the declared and/or proposed policies.
This is a job that is well-suited for the proposed, appropriately staffed and independent new EPOC. It would provide early signals of the likely effect of proposed government policies without having the constraints of existing state agencies. In other words, it would be something of an oversight agency and policy referee.
We invite Prime Minister Andrew Holness to proceed with the implementation of the proposal.