EDITORIAL - Private sector must join the party

IT IS still early days for Jamaica's economic support agreement with the International Monetary Fund (IMF). After this quarter's performance review of the economy by the Fund, there will be 14 more to go.

Yet, we are encouraged by the progress that the Government appears to be making in getting its fiscal house in order.

Or, as Richard Byles, the co-chairman of the committee that is monitoring the agreement, put it: "... The management of the finances of the country is improving. We are borrowing less. We are using our revenues more effectively."

Mr Byles bases his conclusions on the fact that, for the first six months of the current fiscal year, up to the end of September, the Jamaican Government, compared to the same period in 2012, collected J$27.2 billion in revenue; its recurrent expenditure was J$4.8 billion; it spent J$8 billion more on capital projects; and borrowed nearly J$59 billion less.

The upshot is that Jamaica goes into this IMF review better than projected, and overall deficit for the fiscal year so far is approximately J$358 billion. More important is the primary surplus, which at J$32.8 billion is nearly 13 per cent ahead of target.

On that basis, the country is on target to, by the end of the fiscal year, generate the primary surplus of 7.5 per cent of GDP required by the IMF agreement, as part of the strategies to bring under control a national debt of J$1.8 trillion, or over 140 per cent of GDP. Add to these that net international reserves for the current quarter is US$151 million, or 20 per cent, ahead of the IMF requirement, and that the current account deficit for the fiscal year so far has improved by over US$200 million against the same period last year.

Clearly, on the quantitative measures, the Government is on its way to passing the quarter's tests. But there is as yet no cause for celebration.

The economy still remains weak. So, while the Government might see its way through the next few quantitative targets, these, in the absence of economic growth, will become increasingly difficult to pass.

SPEED UP GROWTH AGENDA

In that context, it is important that the Government accelerates its growth agenda. For instance, we look forward to an early green light to the Chinese port and logistics hub at the Goat Islands, and the commencement of work on the additional legs of the tolled highway linking the island's north and south coasts. We hope, too, that there will be an announcement of the resuscitation of the Harmonisation project - the plan for a major resort community in Trelawny on the north shore.

But the economy cannot be sustained only by fiscal prudence and public sector-promoted projects, even if these don't rely on government capital. The private sector has to emerge from its funk and proceed with the investments it placed on hold in the face of collapsed business and consumer confidence.

While there is much more to be done to enhance Jamaica's competitiveness, recent tax reform measures unveiled by the Government should lower transaction costs in the economy. The private sector should take notice.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.