Fri | Aug 17, 2018

Editorial | Be aggressive against corruption, crime, PM

Published:Tuesday | April 24, 2018 | 12:07 AM

Andrew Holness, if his party stays in office long enough, may yet preside over a Jamaican economy growing at five or six per cent a year. But if the credible projections of the International Monetary Fund) are to be believed, that's not for now, or even the medium term.

In the last fiscal year, growth was under one per cent and is not expected to top two per cent until 2020-21. Or, looked at another way, Mr Holness' target, unveiled in 2016, of GDP expanding by at least five per cent by 2020, his so-called five-in-four, has to be taken back to the drawing board.

But perhaps not for long, if the administration reorders its priorities.

Mr Holness' government, quite rightly, has maintained the IMF-inspired robust economic reform programme it inherited from the previous government. So, the macroeconomic environment remains relatively stable. The Budget is balanced, and with the Government running a primary surplus of seven per cent of GDP, it has been paying down its debt, which will next year fall below 100 per cent of the value of total output, from above 140 per cent five years ago. The upshot is that interest rates have fallen, the domestic currency is relatively stable, and inflation is low.

For the growth phase of the project, Mr Holness has placed a superministry under his personal command and into which he has corralled a wide range of agencies that control huge financial resources, oversee or implement public infrastructure projects, or have regulatory authority. The idea is to centralise and fast-track investment, leading to job creation and growth, for which this supersized ministry is named.

But even with this centralisation of decision-making, investment projects, inevitably, have gestation periods. And there is still a public bureaucracy in Jamaica, with many of the bad habits it has built up over decades. One of them is corruption. Around eight in 10 Jamaicans believe that the country's bureaucrats are corrupt.

According to a recent survey on attitudes to democracy in Latin America and the Caribbean, rated on a scale of zero to 100, support for the existing political arrangements was 48.4. People don't trust politicians, in part because they believe them to be corrupt.

Indeed, Prime Minister Holness, at least in his public statements, recognises these deficits and has argued that corruption, over more than five decades of Independence, has held Jamaica back. While the Government has passed legislation to fight corruption, there is not the sense of state aggression and passionate leadership on this front.

"The law provides criminal penalties for corruption by officials, but the Government did not implement and enforce the law effectively, and officials reportedly engage in corrupt practices with impunity," the Americans said about Jamaica in their recent human-rights report.

 

Effects of corruption

 

Corrupt public officials and inept law enforcement help to underpin that other anathema to economic growth in Jamaica, crime and violence, which numerous analyses conclude cost Jamaica between five and seven per cent of annual output by diverting potential investment to paying for security and its effect on labour productivity.

It's hardly surprising, given that more than 1,500 people are murdered in Jamaica each year, that Mr Holness' Economic Growth Council asked for the crime problem to be treated as priority.

We have no doubt that Mr Holness understands this problem, but sense that he is wedded to the paradigm that economic growth comes first in reducing crime, rather than of the idea of growth being an organic outcome of low crime levels, accompanied by reasonable economic policies.

Our suggestion to Mr Holness is that he assume an aggressive and robust posture against corruption and crime, starting in his Government and party. There are obvious risks in this strategy, but the potential rewards are great, including strong economic growth, an improved Jamaica, and the likelihood of a long tenure in Government.