- Dr. Hughes Puts Forward Fiscal Adjustment Strategies
RelatedDr. Hughes Puts Forward Fiscal Adjustment Strategies FacebookTwitterWhatsAppEmail A credible fiscal and economic plan, designed to gain the trust and confidence of the society, is among five critical planks, put forward by Financial Secretary, Dr. Wesley Hughes, on which he said, Jamaica’s fiscal adjustment programme must be grounded.He cited the Jamaica Debt Exchange (JDX), launched in January, as a prime example of this strategy.“The buy-in and participation in the JDX by local market players was a resounding show of confidence in the government’s plans going forward. People were willing to take an interest rate cut, consolidate, and accept longer maturity periods because they expect that, in the long run, there will be recovery and growth for all,” Dr. Hughes stated.He was addressing a recent investment forum sponsored by the Financial Services Commission (FSC) on “The Jamaica Debt Exchange: The Way Forward”.Adapting the International Monetary Fund (IMF) paper titled: ‘Ten commandments for fiscal adjustment in advanced economies’ to the local context, he said that the second plank entails an aggressive debt reduction strategy to reduce the public debt-to-gross domestic product (GDP) ratio over the medium to long-term to sustainable levels.“This second plank requires strategic targeting of a medium to long-term decline in the public debt-to-GDP ratio, not just its stabilisation. Ratios that exceed 60 per cent are unsustainable,” he said. He explained that it is for that reason that one of the amendments to strengthen the Fiscal Responsibility Framework (FRF) speaks, specifically, to that issue.Attendant strategies linked to debt reduction are: containment of the wage bill; limiting the waivers/concessions to special groups; and ensuring that there is an effective social safety net, through targeted social transfers, to provide for those most vulnerable and most affected by the fiscal adjustment policies.Thirdly, Dr. Hughes maintains that the government must apply fiscal consolidation strategies in the areas most conducive to supporting growth. “This third plank requires focused fiscal consolidation in the areas that are most conducive to supporting and generating growth,” told the audience.The fourth strategy put forward by the Financial Secretary, involves a focus on pension reform as part of a medium-term expenditure and debt containment strategy. He stated that, “if we do not address pension reform, the tax system is what will be used to redress the burden on the public purse.”The fifth plank, Dr. Hughes said, requires the strengthening of the governance, rules and capacity of fiscal institutions to sustain a credible and believable fiscal adjustment over time.“What we have in place has allowed a runaway growth in the public debt. The present system of governance is clearly in need of fundamental reform. This is the logic behind the FRF; better fiscal rules, better budgeting processes, better fiscal monitoring, better accountability,” he explained. Dr. Hughes Puts Forward Fiscal Adjustment Strategies Finance & Public ServiceJuly 22, 2010 RelatedDr. Hughes Puts Forward Fiscal Adjustment Strategies RelatedDr. Hughes Puts Forward Fiscal Adjustment Strategies Advertisements
- A lack of leadership threatens energy policy
Last November, the European commissioner for energy, Günther Oettinger, met over breakfast with ministers from the EU states through which the ‘Southern Corridor’ pipeline projects (Nabucco, ITGI, TAP, SEEP) are planned to run, with one goal: to discuss how to end the fighting between the projects, their supporters and national governments. The conclusion was a change in policy towards the Southern Corridor which would bring Caspian gas to Europe via Turkey and Nabucco. The Commission decided that it would no longer support any Southern Corridor pipeline project inside the borders of the EU and would accept whoever secures supply contracts from Azerbaijan. This new policy is a reversal of the drive for an external energy policy based on the spirit of solidarity between member states, a spirit needed if we are to secure our supplies and benefit from a competitive internal energy market. It divides energy policy into an internal and external dimension, and restricts the Commission’s role to the latter dimension alone. The Commission will work with Turkey, Azerbaijan and Turkmenistan to push European interests, but for the rest, the market will decide who builds the pipelines within the Union’s border. Up to that point, Nabucco was the only pipeline planned to run the entire distance of the corridor. It had a transparent inter-governmental agreement based on internal-market principles. Indeed, Nabucco symbolised the ‘Europeanisation’ of energy policy and solidarity between the member states in external projects. Today, this EU flagship project has all but disappeared. The adoption of this new division of competence is the de facto removal of Commission support for Nabucco. Hungary’s Prime Minister Viktor Orbán said on Monday (23 April) that Nabucco is “in trouble”. It is, though it is not yet dead. If Nabucco wins all or part of the gas from the Shah Deniz field in Azerbaijan, there is still hope. Still, it will not be the same project as was originally envisioned as the symbol of united external energy action. The central issue is that the Commission has abandoned its leadership role. The major oil and gas companies will have much of the final say, especially with their national governments. How will the Commission ensure that these many actors work toward the common European good? It is fully possible for energy companies to push their own interests while respecting the rules of the internal market (as the effects of the third energy package, for example, have demonstrated). But the Southern Corridor pipelines are projects whose scope and significance go beyond the EU’s own market, and the Commission has now left itself with very little control over them. Relying on competition alone could lead to the victory of Gazprom’s South Stream project. Such an increase in the Russian monopolist’s power in Europe undermines energy security – the very goal that underlies the whole concept of a Southern Corridor. This lack of a leadership role, if extended beyond the Southern Corridor policy, would further weaken the Commission’s stance in battles of national interests versus collective EU energy goals, such as energy solidarity. If the Commission only regulates internal-market rules, and does not use its moral authority, it will give a free hand to member states to act without regard to Union policy. It risks the failure of the Europeanisation of energy policy of which the commissioner has so often spoken. By weakening its position internally, the Commission is jeopardising its position externally and its ability to shape external energy policy. The abandonment of Nabucco and this change in the Southern Corridor policy is a gamble with the EU’s entire energy strategy. It threatens to move us even further from the objectives of security, solidarity and a Europe that speaks with one voice. The Commission may have lost the first round of this battle, but it must not give up the fight for a true European Energy Community. It must not surrender the future of EU energy policy to national interests alone. Otherwise, the Commission risks losing the power to shape energy policy that it seemed to have gained with the Lisbon treaty. Lena Kolarska-Bobinska is a Polish centre-right MEP and a member of the Parliament’s committee on industry, research and energy.