Thu | Aug 17, 2017

Editorial: Private sector can roll the dice

Published:Sunday | October 18, 2015 | 10:00 AM

Richard Byles can be assured of much sympathy, including from this newspaper, for his concern at the uncertainty over when a general election will be called in Jamaica, which, he implies, makes firms tentative about investment decisions. That, ultimately, impacts economic growth and job creation.

So, the CEO of Sagicor Group Jamaica has told Prime Minister Portia Simpson Miller, if she intends to go to the poll, she should "get it over and done with", rather than continue to excite Jamaicans with the prospect, as she and her People's National Party (PNP) has done in recent months. "The last thing Jamaica needs at this point is a stop-and-start process ... prolonging the period of political uncertainty."

The nervousness captured in Mr Byles' observations has its roots in an old and, we hope, changing order of Jamaican politics, which is among the reasons why we support the idea of a fixed election date, which ought to be firmly placed on the agenda of electoral reform.

Under the Westminster-style parliamentary system prime ministers usually have the constitutional authority to determine the date of the national election, which is usually done at a time more advantageous to their parties. That arrangement is inherently unfair. It gives an advantage to the governing party, which already is in a position to leverage state resources. Such concerns have driven many Westminster jurisdictions, including Britain, to move to fixed election dates.

In Jamaica's case, there is a deeper cause - lingering fear of election campaigns - which goes back to the period of the country's deep ideological cleavage, when politics was as much as blood sport as a contest of ideas. In 1980, for instance, when more than 800 homicides were recorded in Jamaica, a hefty chunk of those deaths related to the election campaign of that year.

Domestic politics mirrored the global Cold War, and business decisions were often influenced by which side of the ideological divide a person stood and the fears they had for the policies of either of the parties.

Much has changed since then. There is largely ideological congruence. Mrs Simpson Miller's party has all but abandoned its democratic socialism for free market orthodoxy. For the past three-and-half years, her government has pursued an IMF-supported but often painful economic reform programme, which, largely, has won the endorsement of the private sector.

Over the period, the country's debt-to-GDP has declined from nearly 150 to per cent to 126 per cent; the fiscal account is nearly in balance; the current deficit has fallen from 12 per cent of GDP to under five per cent; and inflation and interest rates are at their lowest in decades.

Jamaica has also made substantial gains on the Global Competitiveness Index. However, while foreign direct investment (FDI), especially in tourism, has improved, growth remains soft and fragile.

In the circumstance, policy uncertainty ought not to be a major problem for the private sector, whichever parties wins the election, whenever it is held. Given the size of the island's debt and the wariness of global financial markets, Jamaica continues to need the brace of the IMF and other multilateral agencies. The parties, even if they nibble at the edges, have little room for economic adventurism. In other words, we believe private-sector leaders can push ahead with their projects, relatively sure that there will be no major policy lurches, whoever has the majority in Gordon House.