Jamaica's finances threatened by some non-performing public bodiesFriday, October 15, 2021
An examination of the Government's Interim Fiscal Policy Paper (FPP) for the current 2021-2022 national budget has identified the threat being imposed on Jamaica's finances by some self-financing public bodies (SFPBs).
The examination, which was carried out by the Auditor General's Department, has highlighted that the performance of these SFPBs was significantly worse than budgeted. The records show that as of June 2021, there was an overall balance deficit of $367.4 million compared with a budget surplus of $7.56 billion, representing a deterioration of $7.93 billion.
This overall balance deficit figure is projected to continue for the remainder of current fiscal year. The Auditor General's Department has identified seven large public bodies whose poor financial performance is threatening the national treasury.
LOSS MAKING SFPS IDENTIFIED
They are Clarendon Alumina Production Limited, National Water Commission, Housing Agency of Jamaica Limited, Jamaica Urban Transit Company, National Health Fund, National Road Operating and Constructing Company and Urban Development Corporation. Clarendon Alumina, Jamaica Urban Transit Company and the National Road Operating and Constructing Company have been a perennial albatross around the neck of the national treasury, chalking up many years of losses, which have to be funded by taxpayers.
In its examination of the finances, the Auditor General's Department cited, “the impact of the COVID-19 continues to be a contributing factor noted for the performance of some of the entities. The unfavourable results underscore the fiscal risks to the government and although continued monitoring was noted, no specific risk mitigating strategy was mentioned.”
The Fiscal Risk Statement, which is the broad parameter of the Government's fiscal programme, indicated that the Holness Administration has established a ceiling of $6.4 billion in support of selected public bodies for the purpose of arrears and liabilities.
“Given that the total domestic arrears were already $5.48 billion as of June 2021, the established ceiling for these public bodies is in jeopardy of being exceeded by the end of fiscal year 2021/2022,” the Auditor General's Department concluded.
In its report on the FPP, the Auditor General's Department commented, “besides closely monitoring these public bodies, the Interim FPP did not indicated what actions would be taken should the ceiling be exceeded, suggesting that operations and activities will continue along the same path in the face of the growing uncertainty for the entities, and fiscal risk to the Government.”
— Durrant Pate