Higher spending must not jeopardise economic stability or debt sustainability

Higher spending must not jeopardise economic

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Higher spending must not jeopardise economic stability or debt sustainability and as such, Gov- ernment will limit the rate of growth in spend- ing and identify savings from programs. Government´s borrowing will be guided by monetary policy objectives—namely, stable and low inflation – and should also be used to finance income-producing assets; and The external debt will be managed at sustain- able levels over the medium term. Over the medium term, Government will establish an integrated fiscal framework that allows for greater dis- cipline, transparency and account- ability in fiscal policy. As such, in the future, all new administrations will present their four-year fiscal strat- egy within 11‒13 months of being elected and provide a fiscal statement one month after the announcement of a general election. Also, Government will balance the budget and achieve a sustainable cost of government by 2019 and small surpluses from 2020 thereafter. While economic and revenue growth remain mod- est, government will achieve expenditure restraint by focusing on its core responsibilities. It will also raise revenue by improving tax administration and evaluate whether the social return from additional borrowing justifies the cost. Ultimately, a new stan- dard for managing government spending that is efficient and includes rigorous analysis and model- ling will be established.
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5. FISCAL COMMITTEE In the current system, an incoming Government can be fairly uncer- tain about the exact status of public finances and net worth . What is required is a credible and reliable assess- ment of government’s fiscal situation that will give investors, voters and financial markets confidence in the transparency and reliability of public infor- mation. Government will therefore, strengthen the institutional framework that supports its fiscal pol- icy. It will also establish multi-year planning and budgeting horizons to be supervised by the Fiscal Policy Committee. GUIDELINES FOR INCOMES POLICY In this phase of our development, there is likely to be higher unemployment, both frictional and struc- tural. Retrenched workers would find it harder to be re-employed as there will be greater demands for new and different skills. Older and less skilled workers will be the ones most affected. With greater volatility in the business cycle the labour market must be more flexible to keep structural unemployment as low as possible. 36 As such, Gov- ernment will provide greater support to those who lost their jobs and provide training and skills devel- opment programs so that persons can acquire the additional skills they need for the jobs of tomorrow. The approach will include factoring in the needs of long-term workers and allowing workers to partici- pate in work-sharing agreements. These are better alternatives to wholesale retrenchment.
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