Jamaica’s Plan, Not the IMF’s Plan
In my numerous interactions with Jamaicans from all walks of life, I continue to be impacted by a mixed sense of optimism about the future of our beloved country. In each of those encounters, what has struck me most is the oftentimes pessimistic view that a number of us (especially our youth) have, when they think about their ability to build a life for themselves and their families.
As fellow Jamaicans, I'm sure you will agree that we all share a vested interest in ensuring that our economy grows, in a way that helps us to achieve our long-term vision of a stronger Jamaica. The question then is, what role can we each play to help realise the dreams that we all have? I am of the firm belief that the answer lies in the power of each one of us, individually and as a nation; and I also believe that our collective efforts have already begun to bear fruit.
Jamaica, having built a significant amount of credibility and confidence with the International Monetary Fund (IMF), other multilateral organisations, as well as the local and international investment community, has now transitioned from the successfully concluded IMF's Extended Fund Facility (EFF) into a Precautionary Standby Arrangement (PSBA), also with the IMF. At the initiation of the EFF in 2013, with its aggressive fiscal targets, many, including myself, thought it was almost impossible to hit those
targets. In my view, a 7.5 per cent primary surplus target seemed very daunting.
What followed was a clear focus on more prudent fiscal management by the previous administration of government, which I don't believe this country has ever seen before. The first 18 months were not an easy road. Sacrifices were made by public-sector employees and, generally, our country did not have enough resources to meet the basic needs of our people. In supporting the process of maintaining public awareness, the Economic Programme Over-sight Committee (EPOC) effectively played its monitoring role. All this resulted in Jamaica receiving several credit rating upgrades, which have given us a real opportunity to galvanise and move us into sustainable growth, which will also see our country being better able to meet our basic needs, over time.
Today, as we move into the three-year Precautionary Standby Arrangement, Jamaica is still vulnerable to economic shocks, as our debt remains at a very high 120 per cent debt to gross domestic product (GDP) ratio. We are fortunate that commodity prices, notably oil, remain low and, therefore, our current account deficit is at its lowest level in decades. However, there could be significant changes in the external economic environment and Jamaica is always susceptible to natural disasters; hence, the negotiation of
a standby facility of US$1.64 billion.
The focus of the PSBA is Jamaica's economic growth and the creation of jobs for our people, something that will impact each one of us. Under this programme, Jamaica has a targeted growth rate of 2.8 per cent, to be attained as at the end of the programme. The recently appointed Economic Growth Council (EGC) has set a target of 5 per cent GDP growth in four years. Ambitious? Perhaps. However, all this is certainly possible if the Government, with the oversight of the EGC, effectively executes on its growth plan. Likewise, all of us (the private sector, civil society, the Jamaican diaspora and all Jamaicans here at home) will need to get on board, in order
to give Jamaica the best opportunity to succeed.
Through holding each other (including our leaders) accountable, we all must ensure that our country remains fiscally responsible, in order to safeguard our ability to continue to meet our primary surplus target of 7 per cent, hit our debt-to-GDP ratio of 96 per cent in three years, and, as legislated in the Fiscal Responsibility Act, 2014, realise a 60 per cent debt-to-GDP ratio in fiscal year 2025/26.
Net International Reserves
Another key area of focus is our monetary targets. Jamaica's targeted total Net International Reserves (NIR) is US$3.8 billion and its targeted non-borrowed NIR is US$2.5 billion. Our current levels are US$1.5 billion and US$2.5 billion for non-borrowed and total NIR, respectively. Therefore, Jamaica needs to increase foreign exchange (FX) earnings and savings, through local and foreign direct investments. These greater levels of NIR, at the end of the programme, will give Jamaica a greater cushion to manage any shocks that may come our way.
Public Sector Transformation
As Jamaicans, we are also very aware that there are so many opportunities to transform our public sector into one that is more efficient, productive and focused on delivering a higher level of service to its clients. This transformation is a huge task, but it has to be done, and any further delay will negatively impact us all. I am encouraged by the Government's renewed focus on public sector transformation, which signals their acknowledgement of its importance in moving Jamaica forward.
The EPOC, which was put in place at the outset, has proven to be extremely effective in providing oversight and keeping the targets of the EFF at the forefront, ensuring that the GOJ remained on top of the aggressive targets that were set. Through monthly meetings, media releases and media briefings, the EPOC kept the Jamaican public abreast of whether or not our country was on target, as well as used the opportunity to share any concerns and risks that, the committee believed, should have been brought to the public's attention.
The prime minister and his administration have seen it fit to replicate this success, through the continuation of the EPOC, whose primary focus will remain on macroeconomic and fiscal targets/benchmarks. The prime minister had also put in place, very early in his term, the Economic Growth Council and, recently, the Public Sector Transformation Oversight Committee, to monitor and support this huge mandate.
The GOJ has ensured that the PSBA has included the measures, structural benchmarks and quantitative performance criteria in its Macroeconomic Framework Plan, all of which are to be monitored by the three oversight committees that will report to the Jamaican public with an agreed level of frequency.
This is Our Plan
The Macroeconomic Frame-work Plan is Jamaica's plan, not the IMF's plan. More specifically, it is our plan to grow our economy, for the benefit of all Jamaicans, at home and abroad. The government, private sector and other stakeholders have signed off on this plan. As Jamaicans, it is in our best interest to take ownership of it and understand its objectives, its imperatives, its measures, and the targets to be executed and delivered. In doing so, we will all be better able to play our part and hold our government and stakeholders to account.
What's in this for Jamaicans?
If Jamaica hits its macroeconomic, growth, fiscal and monetary targets our country will have a stronger economy, with a higher level of per capita GDP; in other words, on average, every Jamaican will earn greater income. Additionally, with growth comes jobs and, ultimately, greater tax revenues. Greater tax revenues will lead to a government that will be in a much better position to provide our people with a higher quality and greater delivery of basic services such as security, health care, education, sound physical infrastructure and a greater social safety net for our most vulnerable. With such an outcome, we cannot but answer the call to work together and stand for the greatness of Jamaica.
I am humbled by the opportunity to play a role in supporting Jamaica's growth path and look forward to partnering with every Jamaican in working towards the future economic success of our great country.
- Keith Duncan is co-chairman, Economic Programme Oversight Committee.