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Was Don Wehby a success at the Ministry of Finance?
By Bill Box
Friday, August 14, 2009
When the former Deputy CEO of GraceKennedy, Don Wehby, was appointed to the Government back in 2007 as Audley Shaw's wingman, the move by Prime Minister Bruce Golding was hailed as a master stroke.
Don Wehby
Wehby would compensate for Shaw's inadequacies, would curb his enthusiasms and lend an element of technical competence to the Ministry of Finance.
As a 'wunderkind' he would wave his financial wand over the country's finances and all would be well; after all, he produced wonders for GraceKennedy.
In an effort not to further Kirk Shaw, Wehby's title would be Minister Without Portfolio in the Ministry of Finance and he would be made a senator thus shielding him from the heat of the political cauldrom. Indeed Dwight Nelson, essentially a trade unionist, would add to a triumvirate that would run the Ministry of Finance.
This earned Shaw the unflattering epithet, "one-third". In other words, it took three men to head the Ministry of Finance and this demonstrated that not much faith was reposed in Shaw as the man with the plan, the big boss of the Ministry of Finance.
After two years in the Ministry of Finance and having announced that he would be returning to the private sector, the question is what has Don Wehby achieved and is he walking away satisfied with his tenure in Government?
To answer these questions it is important to ascertain what Wehby's mandate was
A year into the job,Wehby said that his role was to:
1. Manage the fiscal situation through more fiscal discipline and tighter fiscal management.
2. Oversee comprehensive tax reform, that among other things would be less onerous on businesses and more equitable on the citizenry.
3. Ensure the divestment and reduction of losses of public bodies outside the government budget, more particularly Air Jamaica and Caymanas Park.
4. Participate in the communication of the government's fiscal policies.
5. Act as a senior envoy in ascertaining funds from both bilateral and multilateral agencies in order that the Government could both address its budget deficits and meet its debt obligations.
Don Wehby's Report Card
Title - Minister Without Portfolio in the Ministry of Finance Subjects
Fiscal Management - For FY 2008/09 the government recorded a fiscal deficit of 4.7 per cent of GDP with the target set at 4.5 per cent. It got off to a relatively good start.
Growth - Wehby and his team projected real GDP growth of three per cent , triple the rate achieved in the previous year. That target was never met.
Inflation - set for 10 per cent for FY 2008/09, another target that was not met.
Revenues - Tax revenues of J$246 billion fell short by seven per cent with GCT being 20 per cent less than budgeted. Revenues for the fiscal year were 10 per cent below budget.
FY 09/10 - The budget was woefully inadequate in terms of projected revenue. The Estimates of Expenditure tabled totalled $547.75 billion but was later increased to $556.7 billion. Of this amount, $122 billion was to be spent on the public sector wage bill. Wehby and his team projected that the Government would earn $340 million with it borrowing $216 million to meet its remaining obligations. To date the revenue measures expected to finance the expenditure budget, let alone capital projects, free health care and education, have not been outlined.
Wages and salaries for April to June of this year came to $70 billion with revenues coming to just $62 million. This year alone, the deficit is a whopping $36 billion. No accountant would be happy with this kind of balance sheet.
Performing grade - 3 out of 10.
Addressing the debt problem - The country's debt now stands at $1.2 trillion and the Ministry of Finance is no closer to coming up with a solution to address it.
Back in April Wehby said: " I have done all the financial models, in terms of the debt, and how we can balance the budget. But, fundamentally, the solution to Jamaica's problem is that we must grow the Jamaican economy. And for that, I would say that, as a government, we need to produce a more business-friendly environment."
Commendable, but Wehby has never outlined how to produce a business-friendly environment or produced a working document to that effect.
With the debt ballooning, his team has not come up with a strategy to reduce it. The country is still borrowing heavily to meet its debt obligations and pay its most basic bills.
Performing grade - 0 out of 10.
Tax Reform - The Government has long contended that it would oversee comprehensive tax reform that would be more equitable and friendly to businesses. The Matalon Report was cited as a worthy working document which would be implemented expeditiously. Wehby would oversee the reform of the country's tax structure.
Earlier this week, the new president of the Private Sector Organisation of Jamaica (PSOJ) Joseph M Matalon noted: "We made the choice to eschew comprehensive tax reform in favour of ad-hoc policy tinkering and uneven enforcement practices."
There has been no development in tax reform so far.
Performing grade - 0 out of 10.
Divestment of national assets
Air Jamaica - The decision was taken to divest Air Jamaica with Wehby announcing it was a burden on the national purse. He initially announced that there was interest from a Chinese entity which did not materialise.
Then he said it would be divested by the end of the first quarter of this year. Needless to say that came and went. A new deadline was set which it was said would definitely be met - after all, they had three real suitors, one of which was said to be Spirit. Don Wehby has left office and Air Jamaica has still not been sold and still continues to rack up losses.
Performing grade - 0 out of 10.
Caymanas Park - The country's leading horse racing track was handed to Don Wehby for divestment. His interest in horse racing is well known and his business acumen would see to it that the Government would fetch a fair price. Two years later, Wehby has been unable to attract any serious investors and Caymanas Park may as well be a race track for donkeys.
Performing grade - 0 out of 10.
Sugar Divestment - The Government has long sought to divest state-controlled sugar operations. The Brazilian company Infinity managed to convince Jamaica's negotiating team that it had a deal and it rushed right ahead with it without conducting due diligence. In the end, Infinity ended up broke and the Government was left with egg on its face and got a drubbing from the press.
Performing grade - 0 out of 10.
Making the Ministry of Finance a more technically efficient machine - The appointment of Sharon Crooks as Financial Secretary has not been a success.The Ministry has to date not exhibited the technical competence needed during these turbulent times. Its models and revenue projections have been way off, revealing that the country was in a more calamitous economic predicament than was painted by Wehby's team. He leaves the Ministry of Finance no better than when he entered it.
Performing grade - 3 out of 10.
Communicating sound advice.
Wehby must have known the daunting fiscal position the country was heading into, but throughout remained optimistic. He should have urged that the Government enter negotiations with the IMF sooner than it did. He should have pressed the Government to do so before the budget, thus heading off a further downgrade by Standard & Poors' which now means that Jamaican bonds are now at junk status. Wehby has yet to communicate a master plan for the country to come out of the vicious debt cycle it has found itself in for more than three decades. He has failed to come up with prescriptions for growth, as the country will clock yet another year of no growth. Don Wehby leaves public office with very little accomplished as his report card indicates.
Performing grade - 0 out of 10.
By Bill Box
Friday, August 14, 2009
When the former Deputy CEO of GraceKennedy, Don Wehby, was appointed to the Government back in 2007 as Audley Shaw's wingman, the move by Prime Minister Bruce Golding was hailed as a master stroke.
Don WehbyWehby would compensate for Shaw's inadequacies, would curb his enthusiasms and lend an element of technical competence to the Ministry of Finance.
As a 'wunderkind' he would wave his financial wand over the country's finances and all would be well; after all, he produced wonders for GraceKennedy.
In an effort not to further Kirk Shaw, Wehby's title would be Minister Without Portfolio in the Ministry of Finance and he would be made a senator thus shielding him from the heat of the political cauldrom. Indeed Dwight Nelson, essentially a trade unionist, would add to a triumvirate that would run the Ministry of Finance.
This earned Shaw the unflattering epithet, "one-third". In other words, it took three men to head the Ministry of Finance and this demonstrated that not much faith was reposed in Shaw as the man with the plan, the big boss of the Ministry of Finance.
After two years in the Ministry of Finance and having announced that he would be returning to the private sector, the question is what has Don Wehby achieved and is he walking away satisfied with his tenure in Government?
To answer these questions it is important to ascertain what Wehby's mandate was
A year into the job,Wehby said that his role was to:
1. Manage the fiscal situation through more fiscal discipline and tighter fiscal management.
2. Oversee comprehensive tax reform, that among other things would be less onerous on businesses and more equitable on the citizenry.
3. Ensure the divestment and reduction of losses of public bodies outside the government budget, more particularly Air Jamaica and Caymanas Park.
4. Participate in the communication of the government's fiscal policies.
5. Act as a senior envoy in ascertaining funds from both bilateral and multilateral agencies in order that the Government could both address its budget deficits and meet its debt obligations.
Don Wehby's Report Card
Title - Minister Without Portfolio in the Ministry of Finance Subjects
Fiscal Management - For FY 2008/09 the government recorded a fiscal deficit of 4.7 per cent of GDP with the target set at 4.5 per cent. It got off to a relatively good start.
Growth - Wehby and his team projected real GDP growth of three per cent , triple the rate achieved in the previous year. That target was never met.
Inflation - set for 10 per cent for FY 2008/09, another target that was not met.
Revenues - Tax revenues of J$246 billion fell short by seven per cent with GCT being 20 per cent less than budgeted. Revenues for the fiscal year were 10 per cent below budget.
FY 09/10 - The budget was woefully inadequate in terms of projected revenue. The Estimates of Expenditure tabled totalled $547.75 billion but was later increased to $556.7 billion. Of this amount, $122 billion was to be spent on the public sector wage bill. Wehby and his team projected that the Government would earn $340 million with it borrowing $216 million to meet its remaining obligations. To date the revenue measures expected to finance the expenditure budget, let alone capital projects, free health care and education, have not been outlined.
Wages and salaries for April to June of this year came to $70 billion with revenues coming to just $62 million. This year alone, the deficit is a whopping $36 billion. No accountant would be happy with this kind of balance sheet.
Performing grade - 3 out of 10.
Addressing the debt problem - The country's debt now stands at $1.2 trillion and the Ministry of Finance is no closer to coming up with a solution to address it.
Back in April Wehby said: " I have done all the financial models, in terms of the debt, and how we can balance the budget. But, fundamentally, the solution to Jamaica's problem is that we must grow the Jamaican economy. And for that, I would say that, as a government, we need to produce a more business-friendly environment."
Commendable, but Wehby has never outlined how to produce a business-friendly environment or produced a working document to that effect.
With the debt ballooning, his team has not come up with a strategy to reduce it. The country is still borrowing heavily to meet its debt obligations and pay its most basic bills.
Performing grade - 0 out of 10.
Tax Reform - The Government has long contended that it would oversee comprehensive tax reform that would be more equitable and friendly to businesses. The Matalon Report was cited as a worthy working document which would be implemented expeditiously. Wehby would oversee the reform of the country's tax structure.
Earlier this week, the new president of the Private Sector Organisation of Jamaica (PSOJ) Joseph M Matalon noted: "We made the choice to eschew comprehensive tax reform in favour of ad-hoc policy tinkering and uneven enforcement practices."
There has been no development in tax reform so far.
Performing grade - 0 out of 10.
Divestment of national assets
Air Jamaica - The decision was taken to divest Air Jamaica with Wehby announcing it was a burden on the national purse. He initially announced that there was interest from a Chinese entity which did not materialise.
Then he said it would be divested by the end of the first quarter of this year. Needless to say that came and went. A new deadline was set which it was said would definitely be met - after all, they had three real suitors, one of which was said to be Spirit. Don Wehby has left office and Air Jamaica has still not been sold and still continues to rack up losses.
Performing grade - 0 out of 10.
Caymanas Park - The country's leading horse racing track was handed to Don Wehby for divestment. His interest in horse racing is well known and his business acumen would see to it that the Government would fetch a fair price. Two years later, Wehby has been unable to attract any serious investors and Caymanas Park may as well be a race track for donkeys.
Performing grade - 0 out of 10.
Sugar Divestment - The Government has long sought to divest state-controlled sugar operations. The Brazilian company Infinity managed to convince Jamaica's negotiating team that it had a deal and it rushed right ahead with it without conducting due diligence. In the end, Infinity ended up broke and the Government was left with egg on its face and got a drubbing from the press.
Performing grade - 0 out of 10.
Making the Ministry of Finance a more technically efficient machine - The appointment of Sharon Crooks as Financial Secretary has not been a success.The Ministry has to date not exhibited the technical competence needed during these turbulent times. Its models and revenue projections have been way off, revealing that the country was in a more calamitous economic predicament than was painted by Wehby's team. He leaves the Ministry of Finance no better than when he entered it.
Performing grade - 3 out of 10.
Communicating sound advice.
Wehby must have known the daunting fiscal position the country was heading into, but throughout remained optimistic. He should have urged that the Government enter negotiations with the IMF sooner than it did. He should have pressed the Government to do so before the budget, thus heading off a further downgrade by Standard & Poors' which now means that Jamaican bonds are now at junk status. Wehby has yet to communicate a master plan for the country to come out of the vicious debt cycle it has found itself in for more than three decades. He has failed to come up with prescriptions for growth, as the country will clock yet another year of no growth. Don Wehby leaves public office with very little accomplished as his report card indicates.
Performing grade - 0 out of 10.
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