Keith Duncan | Let’s resolve to put Jamaica first in 2019

Jamaica's economic programme has had significant successes in recent years. We have achieved a high level of macroeconomic stability and debt to GDP is projected to close 2018-19 fiscal year below 100 per cent. As a result, fiscal space continues to open up, which has resulted in increased spending on Infrastructure, social programmes, national security and housekeeping expenditures.

We have seen unemployment at the lowest level in decades, the net international reserve is more than adequate, tax revenues are robust, we have low and stable inflation, and interest rates are at an all-time low. Jamaica's macroeconomic indicators are overwhelmingly positive.

Growth lags

Growth, however, continues to underperform projections as Jamaica struggles to break above an annual growth rate of two per cent. But we are fairly optimistic that if we continue to get it right going forward, Jamaica can break out of the low-growth syndrome.

A critical juncture for Jamaica occurred in 2010 with the first debt swap (JDX) and the legislated Fiscal Responsibility Act, and after missteps in 2011 through 2012 the subsequent tough fiscal adjustments from 2013-2016 to meet the aggressive 7.5 per cent and later seven per cent primary surplus targets, which continued across political administrations from 2016 through to 2018.

We are well under way to underline the macroeconomic stability with the pending Independent Central Bank and Fiscal Council. There are also welcome policy initiatives to maintain fiscal sustainability through efforts afoot to contain the mounting pension obligations and managing the fiscal risk of national disasters.

Critical success factor

The most important ingredient to Jamaica's success to date was that both political administrations, PNP and JLP, have been committed to fiscal responsibility and the economic reform programme. There was a general desire for Jamaica to deliver on the programme and to hit the targets and pass the IMF tests to ensure that we could set on a course to improve the quality of life of all Jamaicans.

As we move forward, and the current economic programme under the IMF comes to a close in 2019, where we will say thank you and "goodbye and ta-ta" to the IMF, as former Prime Minister P.J. Patterson did in 1995, Jamaica again will have to take full ownership of our economic programme going forward.

Economic programme post-IMF

Minister of Finance Dr Nigel Clarke is determined to lead Jamaica into economic independence which, ironically, in 1968 National Hero Norman Manley charged our leaders with this responsibility. We look forward to an economic programme with the same level of granularity, specific, measurable deliverables as we have seen under both the Extended Fund Facility and the Precautionary Standby Arrangement under the IMF from 2013 through 2019.

Engine of Growth - Private sector, micro, small and medium enterprises

There is definitely increased economic activity, despite the fact that the growth numbers have not been in line with projections. We all are therefore hopeful that Jamaica can maintain the momentum, but this has to be driven by the private sector.

Micro, small and medium enterprises (MSMEs) are the engine of growth, contributing over 60 per cent of GDP and approximately 70 per cent of the labour force. However, access to capital continues to be a major challenge for MSMEs and represents only 13 per cent of bank credit.

As the Government continues to reduce its debt and more money is available to fund private credit, we have to find ways to stimulate the MSMEs.

MSMEs must take responsibility for getting their houses in order with attention paid to proper corporate governance and generating financial statements while focusing on increasing productivity and growth. Access to credit alone will not produce the results we want if these businesses are not prepared. This sector must take the initiative and the responsibility to seek out the expertise (DBJ, JBDC, etc) to get their houses in order.

The banking sector and the capital markets are required to look at, and modify, how risk is adjudicated to the MSMEs to ensure that the increasingly available liquidity sitting in the financial system can be deployed in value added economic activity which would further spur growth.

Emphasis on human capital development

Jamaica's wider populace has paid the price for the country's fiscal challenges and the absence of a comprehensive and sustained economic programme in the past. Our resource allocation to education, health, social programmes, housing, ageing infrastructure, national security, has been inadequate, which has led to the most vulnerable in our society being marginalised and being left with little hope. This has undoubtedly been a major contributor to our crime problem.

As the fiscal space continues to open up, and we see the highly visible infrastructure roadwork being implemented, we need to ensure that increased resources are also made available for the development of our human capital, our youth, especially the unattached youth, through health, education and training, rehabilitation of our inner cities, affordable housing to ensure that our people are productive and prepared for opportunities so that Jamaica's growth can be more inclusive and value added.

Corruption - Zero tolerance

Corruption undermines trust in our institutions and our leaders. Jamaica now needs to walk the walk on corruption and take a zero-tolerance approach. Many of us have been willing to turn a blind eye as we have seen so many instances of corruption across political administrations. As a country we have to take a stand and not make it a blame game in scoring points, but to ensure that Jamaica's scarce resources are not wasted.

This unconscionable waste of resources is extremely painful for all Jamaicans, and more so the vulnerable in our society who are struggling to make ends meet or just don't have the means.

Crime, a national crisis deserving a unified response

In the same manner that Jamaica achieved political consensus and broad-based support for the economic programme, the nation requires this same type of consensus around the critical area of crime, which is an absolute drag on our economy (estimated at greater than three per cent of GDP). Crime also impacts the psyche of our Jamaican people, who live in fear.

While we celebrate the success of the more than 20 per cent reduction in murders last year, Jamaica still continues to lose precious lives at an alarming rate. Despite the reduction last year the murder rate remaining at crisis levels at more than 46 per 100,000.

Our political leaders need to take crime out of the political arena and align with the security forces around a strategic plan to deal with this horrendous matter of crime, much in the same way that there was alignment around Jamaica's economic programme, and we achieved continuity in implementation of same.

We as a country need to demand of ourselves and our political leaders a level of maturity that will see a united Jamaica around a sustainable plan to continue Jamaica's crime-reduction efforts.

It would be a major win for Jamaica if our prime minister and the leader of the opposition would continue this engagement process with stakeholders, inclusive of the JCF and the JDF, and agree on how we move forward and publicly align and demonstrate that all of Jamaica is aligned around our strategic and tactical response to crime.

Global headwinds and Jamaica is poised

While there are significant global challenges, trade tensions, USA/China, Brexit, etc, and a projected slowdown in global growth levels, Jamaica has the opportunity to build on the macroeconomic stability to buck the global trend and build a sustainable growth trajectory that works for all Jamaicans.

But it will require consultation, consensus building and a level of political maturity to ensure that we don't waste this opportunity to achieve our Vision 2030 objectives, hopefully sooner rather than later.

- Keith Duncan is the co-chairman of the Economic Programme Oversight Committee and a vice-president of the Private Sector Organisation of Jamaica. Feedback: editorial@gleanerjm.com