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1. RATIONALE FOR THE CREATION OF A PUBLIC INVESTMENT MANAGEMENT SYSTEM (PIMS) IN JAMAICA The Government has committed to strengthen Jamaica’s public investment management system, as part of a comprehensive public financial management (PFM reform) agenda. This reform has seen the incorporation of public investment management as part of an enhanced fiscal governance framework that seeks to increase fiscal surpluses over time and concurrently reduce the debt to gross domestic product (GDP) ratio so that public resources can be allocated to public investment and other activities that have the potential to contribute to growth in the economy.

Cabinet Decision No X of March 2014 gave approval for the institutionalization of the Public Investment Management System (PIMS) and, in doing so, standardize the treatment of public investment across the public sector with respect to the entire project cycle.

Public investment projects are investments that require planning, execution, monitoring and evaluation carried out as an integrated set of activities aimed at meeting a development objective, at a specific cost and within a defined timeframe(Section 48A, FAA Act Amendments 2014). The Financial Administration and Audit Act (FAA Act) (Amended), 20141 sets out the elements of the strengthened Public Investment Management System (PIMS) which will seek to create a common framework for the preparation, appraisal, approval and management of all public investments in Jamaica, irrespective of the source of funding or procurement and implementation modalities. A key element of the system is the Public Sector Investment Programme (PSIP); a rolling 5 year plan of Cabinet approved public investment projects.

Since these amendments, more legislative and regulatory work has been done to further refine the PIMS and, by extension, the PSIP. In February 2015, additional amendments to both the FAA and PBMA provided for exceptions to the definition of public investment. The exception limits public investment to those undertaken by entities within the specified public sector. The specified public sector is defined as the public sector minus those entities that will be certified as commercial by the Auditor General and, therefore outside of the fiscal rules, as at April 1, 2017. It is anticipated that only a few entities will qualify and the specified public sector will encompass much more than 90% of the public sector. The ambits of the PIMS and PSIP, therefore, is quite extensive in scope.

The Financial Administration and Audit (Amendment) Act 2014 – Fourth Schedule (Section 48B (2) provides that an element of the Public Investment Management System shall be a Public Investment Performance Report. This is a comprehensive performance report on the Government’s Public Investment Programme, which shall be produced and published periodically by the Minister.

1 Gazette 31st day of March 2014, enacted April 1, 2014

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June 12, 2021


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Strategic Public Sector Transformation Project: IBRD Loan No. – 8406- JM Consultancy to implement Project Management Training Programme

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1. BACKGROUND The Government of Jamaica has pursued strategic public investment programmes for over thirty years1. Though there has been institutional ownership of the process, it is believed that the programmes were not streamlined and cohesive enough to allow for the anticipated outcomes. Reviews of the previous public investment frameworks, including their weaknesses, indicate that the quality of the projects, project execution in terms of physical outputs and adherence to the timelines for project execution were problematic. Notwithstanding the weaknesses, many lessons were learnt and these lessons have informed the current process of strengthening the Public Investment Management System (PIMS).

Cabinet Decision No 38/13 of October 2013 gave approval for the institutionalization of the Public Investment Management System (PIMS) and, in doing so; standardize the treatment of public investment across the public sector with respect to the entire project cycle.

A new section 48J was introduced into the FAA Act as well as a Fourth Schedule which specifies the elements of the Public Investment Management System including the main stakeholders and their roles and the intended outputs and outcomes of the PIMS. Key among these new statutes were definitions related to “public investment” and “public investment project”. Amendments were also made to the PBMA with respect to public investment given that much of the public investment in Jamaica is executed through public bodies.

Since these amendments, more legislative and regulatory work has been done to further refine the PIMS and, by extension, the Public Sector Investment Programme (PSIP). In February 2015, additional amendments to both the FAA and PBMA provided for exceptions to the definition of public investment. The exception limits public investment to those undertaken by entities within the “specified public sector”. The “specified public sector” is defined as the public sector minus those entities that will be certified as commercial by the Auditor General and, therefore outside of the fiscal rules, as at April 1, 2017. It is anticipated that only a few entities will qualify and the specified public sector will encompass much more than 90% of the public sector. The ambit of the PIMS and PSIP, therefore, is quite extensive in scope.

The Public Investment Management Committee (PIMC) and the Public Investment Secretariat have both been given central roles in the new Public Investment Management System (PIMS). The establishment of these bodies and clarity about their roles and responsibilities is critical to the success of the PIMS.

The role and the responsibilities of the PIMC (PIMC) and the PIMSEC are laid out in the Fourth Schedule of the Financial Administration and Audit (Amendment) Act 2014, hereinafter referred to as ‘the Act’.

It is intended that PIMC will be the principal authority on PIMS in Jamaica and as such will be a key adviser to the Cabinet in terms of their executive decision making regarding the Public Sector Investment Programme (PSIP), in terms of which projects are included and which ones are not.

1 The process pre-dates to 1978 but the World Bank Structural Adjustment Loan in 1982 sought to formalize.

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June 12, 2021


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1.0. BACKGROUND:

The Government of Jamaica has pursued strategic public investment programmes for over thirty years

1 . Though there has been institutional ownership of the process, it is believed that

the programmes were not streamlined and cohesive enough to allow for the anticipated outcomes. Reviews of the previous public investment frameworks, including their weaknesses, indicate that the quality of the projects, project execution in terms of physical outputs and adherence to the timelines for project execution were problematic. Notwithstanding the weaknesses, many lessons were learnt and these lessons have informed the current process of strengthening the Public Investment Management System (PIMS).

Cabinet Decision No 38/13 of October 2013 gave approval for the institutionalization of the

Public Investment Management System (PIMS) and, in doing so; standardize the treatment of

public investment across the public sector with respect to the entire project cycle.

A new section 48J was introduced into the FAA Act as well as a Fourth Schedule which specifies the elements of the Public Investment Management System including the main stakeholders and their roles and the intended outputs and outcomes of the PIMS. Key among these new statutes were definitions related to “public investment” and “public investment project”. Amendments were also made to the PBMA with respect to public investment given that much of the public investment in Jamaica is executed through public bodies.

Since these amendments, more legislative and regulatory work has been done to further refine the PIMS and, by extension, the Public Sector Investment Programme (PSIP). In February 2015, additional amendments to both the FAA and PBMA Acts provided for exceptions to the definition of public investment. The exception limits public investment to those undertaken by entities within the “specified public sector”. The “specified public sector” is defined as the public sector minus those entities that will be certified as commercial by the Auditor General and, therefore outside of the fiscal rules, as at April 1, 2017. It is anticipated that only a few entities will qualify and the specified public sector will encompass much more than 90% of the public sector. The ambit of the PIMS and PSIP, therefore, is quite extensive in scope.

The Public Investment Management Committee (PIMC) and the Public Investment Secretariat have both been given central roles in the new Public Investment Management System (PIMS). The establishment of these bodies and clarity about their roles and responsibilities is critical to the success of the PIMS.

The role and the responsibilities of the PIMC and the PIMSEC are laid out in the Fourth Schedule of the Financial Administration and Audit (Amendment) Act 2014, hereinafter referred to as „the Act‟.

It is intended that PIMC will be the principal authority on PIMS in Jamaica and as such will be a key adviser to the Cabinet in terms of their executive decision making regarding the Public Sector Investment Programme (PSIP), in terms of which projects are included and which ones are not.

PIMSEC directly supports the work of PIMC and as such has a pivotal role in the whole system. It is PIMSEC that is the „Gatekeeper‟ of the entire system. Its primary objective is to provide focus, co-ordination and direction to the PIM system and in doing so, improve the quality of the projects that are approved for funding whilst at the same time weeding out unsuitable or unaffordable projects early before they can waste the country‟s limited resources. Like PIMC, it has no executive powers, only an advisory role; therefore, it can

1 The process pre-dates to 1978 but the World Bank Structural Adjustment Loan in 1982 sought to formalize.

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June 12, 2021


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(1) Digital means of processing and delivery offer the opportunity for quick, efficient, rules-based, and scalable programmes. As the Prime Minister is on record saying, we must make the transition to a fully digital society. The potential benefits to Jamaica and Jamaicans are huge. This is our goal and our mission.

(2) The Member of Parliament and local government Councillors have a legitimate and important role to play in assisting the citizen to navigate the State bureaucracy to access benefits offered by the State. Without the role of Members of Parliament, supported by Councillors, who helped to sign people up, and made representation on their behalf when there were problems, the programme would not have reached as many persons, despite the convenience of the digital platform, and it would not have been as successful. The key is to ensure that the Member of Parliament and Councillor cannot unduly influence the results. A digital solution, which is auditable and rules base helps achieve this.

(3) Openness and transparency in the use of public resources, and open, transparent and equitable processes for the distribution of the resources of the State, ultimately empower the State to do more for the people. It is a virtuous cycle.

Madam Speaker, since that time we have moved with alacrity to

• deepen transparency in monetary policy with the passage of central bank modernization legislation;

• deepen fiscal transparency with the passage of the independent fiscal commission legislation;

• deepen transparency around the execution of the Government of Jamaica’s public investment programme with the launch of the Public Investment Map; and

• deepen openness in the public policy formation process with the launch of the Open Government initiative.

I will have more to say about these in a moment. But it is important to make the connection. We are institutionalising transparency in policy execution and applying transparent principles in the use of public resources.

We remain committed to making policy decisions that provide greater openness, transparency, and fairness in the distribution of government resources. That is our goal and our mission as we aim to recover faster and stronger than before.

5.0 Lessons Learned from the Economic Crisis Madam Speaker, when we learn, we grow. So it is always good to distill the “lessons learned” from our significant or important experiences. This is true at the level of the individual and it is also true at the level of the country.

For a young nation experiencing a painful economic shock of historic proportions, it is useful to take stock and distill some of the main economic lessons thus far.

5.1 The Lesson of Buffers – Never leave the cupboard empty

One lesson, at the policy level, is the importance of having buffers that result from an awareness of risk. Economic shocks happen. Sometimes, huge economic shocks happen. From time to time we experience economic shocks arising from commodity price volatility, geopolitical tension, social tensions, natural disaster and yes epidemics and pandemics. Sometimes, unfortunately, we experience more than one of these shocks at the same time.

As a small, open, developing and relatively undiversified economy, Jamaica is particularly vulnerable to a variety of economic shocks. This is our reality.

What has happened to us in the past is that economic shocks have set us back years, even decades.

The economic shock in 1970’s led to 6 years of economic decline between 1974 and 1980 and it took us 14 years to recover to pre-crisis levels of economic output.

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June 12, 2021


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Strategic Public Sector Transformation Project: IBRD Loan No. – 8406- JM Consultancy to implement the Public Investment Management System Training Programme

1

1. BACKGROUND

The Government of Jamaica has pursued strategic public investment programmes for over thirty years1. Though there has been institutional ownership of the process, it is believed that the programmes were not streamlined and cohesive enough to allow for the anticipated outcomes. Reviews of the previous public investment frameworks, including their weaknesses, indicate that the quality of the projects, project execution in terms of physical outputs and adherence to the timelines for project execution were problematic. Notwithstanding the weaknesses, many lessons were learnt and these lessons have informed the current process of strengthening the Public Investment Management System (PIMS). In March 2014, the Honourable Minister of Finance and Planning brought the Cabinet a submission to institutionalize the PIMS and, in doing so, standardize the treatment of public investment across the public sector with respect to the entire project cycle. The Cabinet approved the policy intent and amendments were tabled to allow both the Financial Administration and Audit (FAA) and the Public Bodies Management and Accountability (PBMA) Acts to provide a legislative foundation for the future treatment of public investment in Jamaica. A new section 48J was introduced into the FAA Act as well as a Fourth Schedule which specifies the elements of the Public Investment Management System including the main stakeholders and their roles and the intended outputs and outcomes of the PIMS. Key among these new statutes were definitions related to “public investment” and “public investment project”. Amendments were also made to the PBMA with respect to public investment given that much of the public investment in Jamaica is executed through public bodies. Since these amendments, more legislative and regulatory work has been done to further refine the PIMS and, by extension, the Public Sector Investment Programme (PSIP). In February 2015, additional amendments to both the FAA and PBMA provided for exceptions to the definition of public investment. The exception limits public investment to those undertaken by entities within the “specified public sector”. The “specified public sector” is defined as the public sector minus those entities that will be certified as commercial by the Auditor General and, therefore outside of the fiscal rules, as at April 1, 2017. It is anticipated that only a few entities will qualify and the specified public sector will encompass much more than 90% of the public sector. The ambits of the PIMS and PSIP, therefore, is quite extensive in scope. The Public Investment Management Secretariat (PIMSEC) is a very important stakeholder in this process as it provides a critical independent review of projects which is innate to any transparent and effective public investment management system. As such, the PIMSEC has a responsibility to ensure that its staff are trained and competent in the functions of the PIMS as well as all the various actors and stakeholders within the PIMS (Ministries, Departments and Agencies) who are active participants in the project cycle.

1 The process pre-dates to 1978 but the World Bank Structural Adjustment Loan in 1982 sought to formalize.

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June 12, 2021


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