- Several business leaders are optimistic that Jamaica will be able to manage its economic affairs after exiting International Monetary Fund (IMF) programme arrangements, come November.
- They say their optimism is based on the notable macroeconomic achievements recorded over the last six years under Jamaica’s Economic Reform Programme (ERP) and Government safeguards initiated and being developed to preserve and bolster these.
- Key among the out-turns cited are the significant reduction in debt from 147 per cent of gross domestic product (GDP) to 95 per cent at the end of March 2019; significant foreign reserves, totalling more than US$3 billion, with non-borrowed reserves at the Bank of Jamaica increasing by more than US$1 billion; low single-digit inflation; and further reduction in unemployment to a record 7.8 per cent.
Several business leaders are optimistic that Jamaica will be able to manage its economic affairs after exiting International Monetary Fund (IMF) programme arrangements, come November.
They say their optimism is based on the notable macroeconomic achievements recorded over the last six years under Jamaica’s Economic Reform Programme (ERP) and Government safeguards initiated and being developed to preserve and bolster these.
Key among the out-turns cited are the significant reduction in debt from 147 per cent of gross domestic product (GDP) to 95 per cent at the end of March 2019; significant foreign reserves, totalling more than US$3 billion, with non-borrowed reserves at the Bank of Jamaica increasing by more than US$1 billion; low single-digit inflation; and further reduction in unemployment to a record 7.8 per cent.
Jamaica Employers’ Federation (JEF) President, David Wan, says these and other notable outcomes clearly indicate that “we can manage.”
“Jamaica has demonstrated over the last three to five years that we were able to manage under the IMF programmes we were in, having met and passed all the tests over several quarters. To the best of my recollection, I can’t recall one failed quarter. I think we will continue to perform similarly in the post-IMF era and endeavour to ensure that we never find ourselves in the position, again, where we are debt-burdened,” he tells JIS News.
Mr. Wan says based on the developments, “I think the days [of high debt] are gone, and I believe that we are truly committed to prudent fiscal management”.
The JEF President says the establishment of the Economic Programme Oversight Committee (EPOC) to monitor macroeconomic developments for the duration of the IMF programme arrangements was “an excellent idea”.
Additionally, he says the creation of the proposed Fiscal Council, which will serve as the final arbiter of Jamaica’s Fiscal Rules that stipulate, among other things, a debt reduction target of 60 per cent of GDP by fiscal year 2025/26, is “a good decision”.
However, Mr. Wan argues that the attainment of higher levels of sustainable inclusive growth remains elusive, and is a major concern.
“Growth has been elusive. Even before the IMF programme [was reintroduced] when interest rates were in the teens, 20s and high 20s, growth was elusive. At that point, when we had those high interest rates, the argument was ‘you could never grow significantly if interest rates are this high, because loan rates are going to be very high’,” he says.
“But now we have a turnaround to a low-interest-rate economy, and growth is still elusive. Granted, we are growing… but it’s not in the three, four and five per cent range that we are looking for,” he adds.
Mr. Wan says one of the pivotal levers that the Government will have at its disposal is the primary surplus set aside in the Budget for debt repayment, which now stands at 6.5 per cent.
“At the point when the debt burden comes down to 70 and 60 per cent, it will be time to drop that primary surplus down to six, five or four per cent… maybe even down to zero… and those funds, I believe, will provide additional fuel for economic growth,” he contends.
While acknowledging that much remains to be done to spur higher growth, Mr. Wan remains optimistic this can be achieved, as “we have demonstrated that we can manage our fiscal programme and debt, as also the Budget, without running into too much of a deficit, or any at all”.
Meanwhile, Mr Wan is encouraging well-thinking Jamaicans to play their part to bolster the positive macroeconomic developments that are unfolding.
“To the extent that persons want to get jobs or be in business for themselves, they should endeavour to do so,” he says.
The JEF President also welcomes moves by the Government to make credit more easily accessible, particularly to existing and emerging micro, small and medium-sized entrepreneurs.
“That, I believe, is going to be one of the key inputs that will help us attain the elusive higher levels of sustainable inclusive growth we seek,” Mr. Wan adds.
Small Business Association of Jamaica (SBAJ) President, Hugh Johnson, is equally optimistic, and commends successive Administrations for their commitment to pulling the country out of its economic doldrums and repositioning it as viable for facilitating investments and doing business.
“I think we have some excellent Jamaicans who have been leading this country in that regard over the years,” he tells JIS News.
Mr. Johnson contends that the positive economic journey Jamaica has embarked on “is becoming a way of life now for us”, adding that “I want it to remain as such”.
In this regard, he too welcomes plans to establish the Fiscal Council, and praises EPOC for its monitoring of Jamaica’s economic programme for the duration of the IMF arrangements.
Mr. Johnson also emphasises the need to generate higher levels of sustainable economic growth, incorporating persons at all levels of the society, and urges that steps be taken to ensure no one is marginalised or left behind.
Jamaica Chamber of Commerce (JCC) Director, Warren McDonald, believes “we have grown and learnt sufficiently to handle our own affairs to a greater degree” and “harbours no fear in that regard”.
“I think the bipartisan effort in support of the fiscal and monetary measures to improve our situation has helped to get us to where we are. So, I am fairly confident that we will continue on this path of improving our macroeconomic environment,” he tells JIS News.
Mr. McDonald also acknowledges EPOC’s role in the economic programme’s implementation, and welcomes the proposed Fiscal Council.
The business leaders’ views are consistent with those of EPOC Co-Chair, Keith Duncan, and IMF officials, Dr. Uma Ramakrishnan and Dr. Constant Lonkeng Ngouana.
Speaking with journalists earlier in the year, Mr. Duncan indicated that Jamaica will be in good stead after the IMF relations are concluded.
“We will have sufficient net international reserves, our debt levels will be down… and we will continue to run primary surpluses so that our debt-to-GDP ratio can be reduced to 60 per cent by fiscal year 2025/26,” he said.
Additionally, Mr. Duncan said measures that have been implemented or are being pursued to further consolidate the gains achieved over the last six years, should ensure that Jamaica “remains on track”.
These include legislation affording the Central Bank greater autonomy and streamlining its focus on inflation-targeting; and the Fiscal Council’s impending establishment.
Dr. Ramakrishnan, the outgoing IMF Mission Chief to Jamaica, has said that “without a doubt, we are able to leave with full confidence that the institutional and policy framework is in place… and the policy credibility is there for Jamaica to carry on its own affairs”.
For his part, Dr. Lonkeng Ngouana, the former IMF Resident Representative, emphasised that the country “has reached a place where we don’t have to be here all the time”.
“We are taking the back seat and Jamaica is in the driver’s seat. With what Jamaica has achieved over the past six years, we believe [the country] is ready to exit the IMF and run its own business,” he said.