Seaga
Vernon Daley, Staff Reporter
EDWARD SEAGA, Leader of the Opposition, wants the introduction of laws to restrict Government's ability to run up massive debt.
He also wants legislation to be used in setting a threshold below which the fiscal deficit and money supply must not dip.
In his contribution to the Budget Debate in the House of Representatives last Thursday, Mr. Seaga said the country's economy and systems of government needed change to force its custodians to behave responsibly.
"If the system does not work because those who control it do not understand it or distort it to serve a different agenda, then the system must be strengthened with mandatory requirements set out in the law to compel them to do the right thing," he said.
Mr. Seaga suggested that the national debt, which stood at $601.2 billion at the end of March, would continue to balloon unless there was some limit placed in the law to straightjacket the Government.
The debt shot up by $104.1 billion during the last financial year, on account of Government's borrowing in the local and external markets to finance a range of ongoing programmes, including the multi-billion-dollar debt obligations of the National Water Commission (NWC).
The Opposition Leader offered the same legal remedy for the fiscal deficit and money supply, both of which he said were responsible for high interest rates, a sliding dollar, increased taxes and constant price increases.
"Why should excessive levels of fiscal deficit cause unnecessary tax burden and punitive interest rates? There should be a prescribed base level in law below which the deficit must not fall," Mr. Seaga said.
Last year, Finance and Planning Minister, Dr. Omar Davies, projected that the deficit would be 4.4 per cent. However, he shot wide of the target, ending the financial year with 7.7 per cent deficit. Opening the Budget Debate in the House recently the Finance Minister announced a $13.8 billion tax package designed to chop the deficit and restore confidence in overseas creditors.
Most of the revenues will come from a widening of the 15 per cent General Consumption Tax (GCT) net, to include a range of goods and services and the imposition of a four per cent cess on importers. Both measures have come under heavy criticism since they were announced.
The Opposition Leader admitted last week that the use of the law to control economic policy was not without challenges. He said unforeseen circumstances such as natural disasters, over which policy makers have no control, could cause them to miss targets.
However, he argued that the law could be so framed as to allow for these unplanned circumstances even as it bounds policy makers to specific actions. "It will be said that failure to meet targets brings no sanction other than media rebuke, personal condemnation and some political fall out and these are ineffective in ensuring that repetition does not occur," he said.
Mr. Seaga has previously called for legal restrictions to control Government policy in relation to the economy. In 1994 he proposed the famous Three Money Bills to prevent ministerial influence on monetary policy and secure an enabling environment for local and overseas entrepreneurs to do business.
The Bills called for 100 per cent backing of the local currency, a restriction on lending to the Government by the Bank of Jamaica (BoJ), except temporarily in cases of emergency, and for those measures to be entrenched in the Constitution. The Bills, however, were never debated by Parliament.
