EDITORIAL: Stay the course and widen the fix

This newspaper is encouraged by Prime Minister Simpson Miller's declaration in New York last week that Jamaica is "open for business", and her implied promise that her Government will not veer from its current economic course.

"These are difficult times because of the state of the economy, but we are not going to give up or give in," Mrs Simpson Miller told business leaders and campaigners.

The prime minister has reason to be optimistic.

This week, the directors of the International Monetary Fund (IMF) affirmed the position by their technical team that Jamaica had met its critical first-quarter quantitative benchmarks under a fund-support economic reform programme.

This means that the IMF will release US$31 million to the Government, the second drawdown since the agreement was signed in April. Other multilateral institutions follow the IMF's lead.

There is, too, last week's announcement by Standard and Poor's (S&P) that it is lifting its rating of our sovereign debt to CCC+, still deeply in the realm of junk bond, but better than the selective default assigned to Jamaica after its recent restructuring of its domestic debt. But perhaps more important was S&P's statement that its outlook for Jamaica's debt was stable.

These developments largely reflect the returns for the finance ministry's disciplined control of the country's fiscal accounts even prior to the signing of the IMF agreement, and the fact that it has been able to do better than the Fund's targets on the primary surplus. Such efforts, of course, are not without pain. The Government has had to spend less and borrow less - actions that are essentially concretionary in an economy that is already weak.

Yet, as Peter Phillips, the finance minister, has warned, the pain is not over. Jamaica under the IMF agreement is obliged, this fiscal year, to run a primary surplus of 5.7 per cent of national output. The administration will have to continue to be stingy.

But it is important for the Government to stay the course if it is to make inroads into a debt of J$1.8 trillion, the cost of whose service not only steers government spending away from areas of critical need, but consumes capital the private sector might invest to help generate growth and create jobs.

controlling debt

In that regard, bringing the debt under control is vital to growth. At the same time, the Government will come under pressure to relax its austerity. It must, however, avoid displacing the goal of this programme: creating an environment conducive to growth, for which the debt is a great impediment.

But success in a macroeconomic sphere or the fact, according to Mrs Simpson Miller, that there is "no place prettier than Jamaica", won't be sufficient to have foreign investment flock to Jamaica.

The Government has to underpin these, and its declaration that Jamaica is open for business, by making it actually easy to do business here.

It has to attack the genuine problem of red tape and corruption. On the global index on the ease of doing business, Jamaica ranks 90 of 185 countries and 97 of 142 on the one for competitiveness. We are perceived, also, to be the 83rd most corrupt country in the world, of 176 surveyed. As Tommy Koh, the Singaporean official, reminded us recently, these are real and tangible issues that demur growth and development.

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