Letter of the Day | Investing in Jamaica’s future
THE EDITOR, Sir:
Jamaica has embarked, for four years now, on an economic reform programme to put its public finances on stronger footing. At the same time, the country has set in train structural measures to achieve higher and sustained economic growth, more employment, lower poverty, and improved living standards for Jamaicans.
Amending the legacy of past fiscal profligacy is a journey of discipline and fortitude demanding sacrifices from all segments of society in order to secure a better future. Reducing Jamaica's debt today lays the foundation for a bright future.
Jamaica's public debt stands at nearly 120 per cent of gross domestic product (GDP) today, and 25 cents of each revenue dollar go to service that debt. Another 42 cents go to public-sector wages and pensions. At the end, only 33 cents are left for infrastructure spending, social capital, and upgrading of public goods.
The ongoing fiscal discipline - now the driving mantra across two governments - aims to reduce the public debt to 60 per cent of GDP by FY2025-26, as enshrined in the Jamaica's Fiscal Responsibility Law (FRL). The only viable option under current circumstances is to maintain a seven per cent of GDP primary surplus. With the limited resource envelope, spending composition and its efficiency take on extra importance.
The reforms to date are bearing some fruit. Macroeconomic stability is entrenched and the economy has expanded for eight consecutive quarters (last seen about a decade ago), even if only modestly. Unemployment has reduced (albeit still high), people are returning to the labour force, consumer and business confidence are near historic highs, and public debt has reduced by 25 per cent of GDP since 2013. The current account deficit now hovers around three per cent of GDP, down from double digit a few years ago, which has supported the accumulation of foreign reserves.
BENEFIT OF LOWER DEBT
Lower debt means a more dynamic and prosperous Jamaica, with the private sector as the engine of growth. Lower debt means more options for the Government to spend on Jamaica's future in areas like education, health, infrastructure, and security. Lower debt also means that more can be allocated to protect the poor and the vulnerable, and build a strong and sustainable social safety net where no Jamaican is left behind.
As part of this trajectory, the Government is also tackling the challenge of transforming the public sector. The end goal is a public sector with a size that is right for the country, with efficient service delivery and less government bureaucracy. Such a public sector would give room for the private sector to grow, stimulate investment, and create jobs.
The ownership of the economic reform programme, as reflected in the partnership between the Government and the Jamaican people, has been instrumental in the programme's success. Jamaica serves as a shining example of what a country can achieve when the society as a whole comes together to support economic reforms. Sustained policy efforts and continued steadfast support from the people of Jamaica are essential to fully realise the growth and employment dividends. Protecting and advancing this progress promises a bright future for Jamaica.
CONSTANT LONKENG NGOUANA
IMF Resident Representative for Jamaica