Tue | Aug 14, 2018

Editorial | The PM’s leverage against crime, corruption

Published:Monday | April 23, 2018 | 12:00 AM

The International Monetary Fund (IMF) is not about to give up on Jamaica, but its technocrats admit, as they did in their latest Article IV review of the island's economy, to a sense of discouragement over the feeble growth and slow social transformation after half a decade of fiscal and other reforms.

It is true that since these efforts began in earnest in 2012 Jamaica has pulled itself back from a fiscal precipice. Its debt, which was heading inexorably towards one and half times the size of its annual output, has decreased, in relative terms, by over 20 percentage points, and will, in a few years, fall to below 100 per cent of gross domestic product (GDP). The Budget is balanced, despite the obligation to run a primary surplus of seven per cent of GDP. A runaway current account deficit is now in the low single digit, inflation is low, and the Jamaican dollar is relatively stable.

Yet "growth and social outcomes," the IMF observed, "have been discouraging", enhancing the risk of reform fatigue and, thereby, public support for the programme. Growth over the period has averaged 0.9 per cent a year, the same level as the previous four decades and a rate that galvanised consensus around the need for reform.

While the logic of this project is incontrovertible, it has insufficiently emphasised two critical hindrances to growth: crime and corruption - the former now highlighted by the Fund.

Data on the cost of corruption are not immediately available, but everyone considers it not only a big problem, but a drag on growth. During last year's parliamentary debate on a single anti-corruption agency, Prime Minister Andrew Holness conceded that Jamaica might have achieved much more since Independence were it not for corruption.

We have a good idea, though, of the price extracted by crime in a country where there were over 1,600 murders last year, the fear of violence is high, and firms divert up to a fifth of their income to security. Indeed, many studies indicate that crime wipes between five and seven per cent annually from Jamaica's GDP, which could be recouped if the murder rate dropped to, say, the low teens, people were less fearful, and companies didn't invest so much in making plants and workers safe. That capital could be allocated to production without extraordinary action such as the creation of the superministry with a multitude of agencies and the prime minister at its helm. Economic growth, all things being equal, would be the organic outcome of a stable society.

 

CREDIBLE EFFORTS

 

Indeed, Mr Holness' Economic Growth Council (ECC) predicated its target of GDP expansion of five per cent a year by 2021 on, among other things, lowering crime and enhancing citizen security. Two things are necessary in this regard: sustained investment in the area of security and credible efforts to build trust in political leadership and the public bureaucracy. In relation to the former, the administration could find some of the resources by radically downsizing the super ministry, sending some of its activities back to their core ministries, and putting some of the savings to national security.

The other matter resides directly with Mr Holness and the quality of his leadership, including his ability to confront and defeat those in his party and government who may be corrupt or would turn a blind eye to the problem. The prime minister made two appointments recently, which gives him leverage.

In the new police chief, Major General Antony Anderson, he has a man of proven integrity who should be mandated and facilitated to reform a corrupt constabulary. Nigel Clarke, without a long history in politics, is close to the prime minister and on the Government's thin Parliament benches, provides Mr Holness with additional cushion for any confrontation with the old guards.