Editorial | Dr Clarke’s successor

The Gleaner congratulates Nigel Clarke on his appointment as a deputy managing director of the International Monetary Fund (IMF), a transition that for people who have paid attention is not entirely surprising or unexpected.

But the timing of Dr Clarke’s departure – as he takes up his new job – and who is to replace him as Jamaica’s finance minister are likely to be a source of a headache for Prime Minister Andrew Holness, notwithstanding his statements to the contrary. It comes as the central bank has warned of a likely contraction in the economy, on the cusp of revising the Government’s Budget in the aftermath of a hurricane, and with a general election likely to be held within a year.

These issues are compounded by the fact that Mr Holness is perceived to have no one on his side of Parliament with the competence, or possessing as safe a pair of hands as Dr Clarke, with which to marshal the economy.

Whoever gets the job, in addition to managing the numbers, will therefore also have the immediate task of winning the confidence of Jamaicans.

There is little doubt that Dr Clarke will acquit himself with competence in whatever mandate he is assigned. In that sense, his tenure at the Fund will be successful.

However, it is important that the finance minister and the Government, of which he is still a member, address the unrealistic and uninformed expectations of some Jamaicans of what he might be able to do for the country, lest it lead, ultimately, to sourness and disappointment.

These expectations, of course, are rooted in a misapprehension of how the IMF actually works, an assumption of it as an institution where the managers merely respond to the needs of members, without the context of the economics and politics of power within which the Bretton Woods institutions largely continue to operate.

Which does not mean that Dr Clarke will be entirely without the ability to influence behaviours and policies that benefit Jamaica, and other countries at similar stages of development and possessing fragile economies.

PRIVILEGED POSITION

As one of Kristalina Georgieva’s four deputy managing directors, he will be part of her senior management team, and therefore in a privileged position to propose and/or argue, from the inside, for programmes and/or reforms that he believes will benefit developing countries. For instance, Antoinette Sayeh, the Liberian academic and former minister who he succeeds, has a reputation as advocating for greater flexibility in the Fund’s operations to make it less difficult for countries to access financing during periods of crisis. She was also a known champion for capacity-building in developing countries.

Nigel Clarke, may, in time, develop a public voice on some such issue. Clearly, though, Dr Clarke – whose DPhil is in numerical analysis – is by temperament and intellect, likely to be quite suited for the post he is about to assume.

The general lack of surprise at his joining the IMF is, in part, because his move to one of the Bretton Woods institutions, or some similar enterprise, has long been speculated upon and, in some ways, publicly signalled.

For example, in 2020, when Donald Trump’s candidate, Mauricio Claver-Carone, was campaigning for the presidency of the Inter-American Development Bank (IDB), he highlighted Nigel Clarke as being among a generation of new talent in the Americas who could join him at the IDB.

But while Claver-Carone was undone by scandal, Dr Clarke’s reputation continued to rise for the stability he has maintained in the Jamaican economy since he became finance minister in 2018, and especially for the continued reduction of the country’s debt as a proportion of GDP and for the pace of the recovery after the COVID-19-induced collapse.

Put it mildly, Dr Clarke and Jamaica became the faces of effectiveness of its policies in developing countries if properly implemented for the IMF .

SUBJECT TO CRITICISM

Yet, his successes notwithstanding, he still faced significant challenges that made him subject to criticism.

After a dozen years of reform – over six of which Dr Clarke has been the minister – Jamaica has been unable to translate its debt reduction, macroeconomic stability and tight fiscal controls into robust economic growth. Except in the immediate post-COVID-19 recovery period, growth has hovered at below two per cent, although in 2023 it was 2.2 per cent.

Last week, with the central forecast that after 12 quarters of positive growth, going back to 2021, the economy could contract in the second quarter, ending in September, of the current fiscal year. The bank said that over the full fiscal year, the decline could be up to 1.5 per cent.

Moreover, the Government is yet to publicly identify how it will raise the J$45 billion posted as the cost to repair the damage left by the hurricane, although most of that spending is expected in the coming (April 2025-March 2026) Budget. Neither has it disclosed the assets it suggested it would divest to close a similar gap in the current Budget. Nor has it said when this will happen.

The Government must also call a general election by the end of September 2025, which will likely add to the challenges of the new finance minister.

Unless he does something utterly surprising, like reaching for someone outside the Government, Prime Minister Holness’ choices seem limited.

Given that the Constitution requires that the finance minister be a member of the House, Mr Holness could make himself the de jure minister and appoint, say, Senator Aubyn Hill, the trade and investment minister and a former banker, to carry out the day-to-day functions as a minister of state. Mr Holness would formally sign the documents.

He could also do the same thing with Dana Morris Dixon, a senator who is the information and digital transformation minister, who has experience in business and financial/economic analysis. Dr Morris Dixon now works from Mr Holness’ office.

He could possibly call back the education minister, Fayval Williams, who was previously a minister in finance, without having the top job. Another possibility is Don Wehby, the CEO of the GraceKennedy conglomerate, who is a government senator. He once took a secondment to work in the finance ministry. He might consider it again.

The new minister will have a ticklish path to traverse.