Head of Government Presentation
III CEO Summit of the Americas
“Made in the Americas”
Public-Private Partnerships to promote transparency
by
The Most Honourable Andrew Holness, ON, MP
Prime Minister of Jamaica
13 April 2018
Lima, Peru
SALUTATIONS
Excellencies Heads of State
Colleague Heads of Government
Distinguished Business Leaders
Ladies and Gentlemen
Good Morning
Welcome and Introductions
Thank you for allowing me to address you this morning.
I am honoured to be at this the CEO Summit here at the Summit of the Americas as we share our perspectives on shaping a better future for all our peoples.
This is my first Summit as Prime Minister of Jamaica.
Let me thank You Excellency, President Vizcarra, for graciously hosting this year’s Summit of Americas and for the warm reception given to me and my delegation.
Now, more than ever, we face a reality where we need each other. Partnerships are so important to the growth and prosperity of any country. Even as we face our own national realities, we must be cognizant of the fact that the global and local environment requires collaboration and cooperation to maximize opportunities and overcome common challenges in building firm foundations for shared prosperity.
The Jamaican Context
In 2010, Jamaica’s debt to Gross Domestic Product was 140%, among the highest in the world at the time.
My country was teetering on the brink.
We faced a crisis. Ill-conceived and undisciplined fiscal strategies which disincentivized enterprise and productivity, together with the cumulative impact of natural disasters over the years, created a perfect storm when the global financial crisis hit in 2009.
At the end of our last fiscal year, March 31, 2018, our debt to GDP ratio was 105% and we project continued progress in this regard. All other macro-economic indicators are heading in the right direction together with the highest business and consumer confidence in more than a decade, we are turning the corner.
Allow me to share a bit of what happened in between.
In the face of crisis, we had to start a new conversation about the expectations each stakeholder had of each other. This led to the establishment of a broad-based social consensus among stakeholders around action necessary to avoid the economic collapse.
Action meant sacrifice. Stakeholders had to give up claims to entitlements and benefits which the country could not afford. However one-off sacrifice of entitlements and benefits is not a complete solution per se, we had to agree to change our behaviours that generated the need for sacrifice. In exchange for sacrifice government agreed to implement and maintain a disciplined and rules-based monetary and fiscal policy stance and to address the fundamental structural inefficiencies in our public sector and tax system. Private Sector bond holders agreed to restructuring debt in a number of debt exchange arrangements, public sector workers agreed to a wage freeze and the average citizen accepted the necessity of the government maintaining a Primary Surplus Balance of 7% or higher over the last 5 years. In any country such a primary surplus balance over such a long period of time, could be considered extremely challenging without more.
This meant fiscal consolidation and a curbing of government spending. All of this was enshrined in successive IMF agreements and supported by the IDB and the World Bank.
Developing a consensus for immediate sacrifice in exchange for entrenched long term behavior in a highly competitive political environment requires trust, that all stakeholders in the future will moderate their expectations and keep their commitment to disciplined programmes. Trust can only be sustained in a transparent atmosphere where all stakeholders have access to and oversight of the actions of each other. Several oversight bodies were formed to police the consensus on economic actions. This is the formal structure of the Partnership between the Private Sector, civil Society, public Sector workers, the Parliamentary Opposition, church.
This national consensus was not solely focused on economic issues, there is also a national effort to achieve broad consensus on social issues. The Private Sector plays a critical role in supporting dialogue and action on social issues as well, and is a principal partner, influencer and driver of collaboration.
The deliberate engagement of public Sector and private sector partners was and remains instrumental to achieving inclusive sustainable solutions to overcoming crises in Jamaica.
Here is the Jamaican model. We established:
An overarching national consensus body to oversee the emerging economic and social consensus on policy actions. It provides a forum where all stakeholders can dialogue and resolve conflict. It also monitors and ensures that commitments to the consensus are maintained. It is a formal agreement publicly signed by all stakeholders and renewed periodically. This is called the Partnership for a Prosperous Jamaica.
The Economic Programme Oversight Committee – EPOC, initially charged specifically with oversight of compliance with an IMF Extended Fund facility, giving oversight of fiscal reform and macro-economic targets.
The Public Sector Transformation Oversight Committee – PSTOC – as the name suggests, oversees implementation of the government’s public sector reform programme.
The Economic Growth Council – EGC – primarily private sector led grouping established to propose and promote government policies specifically geared at achieving robust growth.
Macroeconomic stability
These committees, whose membership is drawn from a wide cross section of the society, have had a positive impact on the country’s macroeconomic stability and viability.
They form part of a deliberate and disciplined strategy to hold everyone, but more so the government, to account. This public private partnership model is built on transparency which creates greater certainty in government actions and raises alarm when there is deviation from consensus. However, the greatest benefit of public private partnerships to support policy consensus is that it adds an objective voice in the political debate, both to counter opportunistic political forces and unreasonable demands from any stakeholder that would threaten the agreed goals. They constantly remind of the consequence and repercussions from deviations when political leaders may not see it convenient or have the strength or credibility to counter undisciplined impulses.
Importantly, the level of transparency demanded by these mechanisms also inherently reduce or indeed remove the scope for corruption.
Macroeconomic stability is now taking route in Jamaica and we are now building on the foundation of fiscal discipline the pillars of a doctrine of economic growth as meaningful job creation which will lead us to our ultimate goal of economic independence and shared prosperity.
We are charting a path that entrenches growth-inducing reforms so that upon conclusion of the Precautionary Standby Agreement with the IMF, we will manage our affairs in a thoughtful and disciplined way so that our economic independence can be sustained.
Indeed our tool of social partnerships and doctrine of growth is a strong catalyst to build transparency and eliminate corruption.
Governance
As we continue to build on the stable macroeconomic environment underpinned by partnerships; it is fundamental that we also implement a robust governance framework which tackles corruption by building sound institutions that promote accountability and transparency.
We know that clearly defined systems that protect property rights, consistent regulatory practices that curb fraud, corruption and, anti-competitive behavior; as well as established norms around the rule of law, create an environment conducive to investment and innovation.
The Jamaican Government has embarked on an ambitious agenda to strengthen our anti-corruption framework.
We have passed the Integrity Commission Act that merges 3 anti-corruption agencies and creates an enhanced framework. Together with the Major Organized Crime and Anti-Corruption Agency Act (MOCA) which is in its final stages of debate in the Senate, they will institutionalize our approach to anti-corruption. The ecosystem of lack of accountability and transparency will certainly be disrupted.
We will be creating a new national identification system. No one will be anonymous but the Government has every intention of protecting the privacy of all citizens. This move, while making several processes less vulnerable to corruption, will also make Jamaica into a truly digital economy creating new opportunities for greater participation, innovation, efficiency, transparency and an even stronger democracy.
Commercial Public-Private partnerships
With high debt and limited fiscal space, Public-private partnerships have emerged as an important commercial modality to secure economic growth. The mutual benefit that public private partnerships offer is of great value.
As we quicken the pace at which we deliver jobs, improve infrastructure and increase training opportunities that match labour market demands, government must act as the enablers of growth by making it easier to do business, supporting private sector lead entrepreneurship and partnering with the private sector for greater utilization of public assets and provision of public goods and services. A robust PPP allows for unlocking the value of assets; reducing debt; and the mobilization of direct (local and foreign) investments in the economy.
We recognize however, that in order to maximize the value of these partnerships, the public sector must operate in an effective and efficient manner, there has to be a culture change where the public sector bureaucracy understands that in the absence of its ability to spend, its survival at the standards it would like, depends on the efficiency with which it supports businesses and private enterprise, whether large or micro. As government and business leaders, we must understand the synergies between our roles. The public sector must make it possible for businesses to grow, provide the best service, innovate the best technology for our citizens, while ensuring the dignity in quality and equity in access to all citizens particularly the most vulnerable.
Jamaica’s Privatization and Public-Private Partnership Policy seeks to facilitate increased private sector participation in economic development activities by utilizing private sector skills, innovation and capital to create more competitive and efficient enterprises and produce critical infrastructure or services. Jamaica was ranked fourth in the 2017 Infrascope Public-Private Partnership (PPP) programme index for Latin America and the Caribbean. This index demonstrates that Jamaica is among the best prepared for PPP in Latin America and the Caribbean.
Conclusion
The greater challenge is not so much to build growth policy but to institutionalize this policy mix to create an ecosystem that facilitates and results in sustainable and inclusive growth, with meaningful job creation.
We now have a different type of relationship with the private sector that allows for open, transparent processes for engagement; a level playing field and fair competition. The goal is to transform the public sector so that they are able to facilitate the private sector as the main organ of growth in our society. Citizen and investor trust in public and private institutions is eroded due to corruption and a lack of transparency. By utilizing partnerships together with, and as themselves an anti-corruption mechanism, we signal that all partners are committed to upholding accountability, transparency and integrity as the hallmarks of well-designed institutions and democratic governance.
As we come together at this conference; we are focused on a better future, while learning from the past. There is no doubt that effective domestic response capacity is most feasibly pursued through joint, collaborative cross border effort. For a better future, we have a shared responsibility to our citizens and to the world and must work together for a greater quality of life and success for all our peoples. Public Private Partnerships in all their forms are key to our success.
Thank you.