Sun | Sep 24, 2017

Growth, yes, but has Government the legs on which to stand?

Published:Tuesday | September 6, 2016 | 9:00 AMJovan Johnson
Dr Densil Williams
Michael Lee-Chin
Metry Seaga
Donovan Wignall
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There's no debate that Jamaica needs to produce and grow, but it is the legs to get that done that has some key stakeholders worried about whether the Government can achieve its targets.

Prime Minister Andrew Holness has set up a council of volunteers that is expected to propose and then give oversight to projects that are calculated to achieve five per cent gross domestic product (GDP) growth in four years. That is in 2020, one year short of the next constitutionally due general election.

The Economic Growth Council (EGC) had a meeting last month when Holness admitted that the 'five in four' target was not the best for a country that for more than two decades averaged less than one per cent GDP growth.

"Five per cent might look like a great feat coming from 0.25 average, but it's not our true potential, but we are starting, and that's the important thing," Holness said.

The prime minister's confidence, critics say, has been boosted by a soon-to-be expired agreement with the International Monetary Fund (IMF) in which Jamaica has been putting in order its fiscal house that prior to the 2012 signing, was crumbling under a debt-to-GDP ratio of close to 150 per cent.

Four years later, some indicators are more positive as the debt ratio is now close to 120 per cent, while, according to the World Bank, the Government was able to raise US$2 billion in the international capital market last year "at a time when investors were moving out of emerging markets".

But still, concerns remain about the 'five in four' ambition amid predictions by the Planning Institute of Jamaica (PIOJ) and World Bank's forecasts of 1.7 this year and up to two per cent for 2017.

WHAT IS THIS GROWTH AGENDA ANYWAY? - Williams

"I'm not fully clear on what the growth agenda is. What appears to be bandied around as the growth agenda seems to be a list of investment projects," Densil Williams, professor and executive director of the Mona School of Business and Management, told The Gleaner.

"The establishment of the Economic Growth Council is a positive step, but merely getting more projects into Jamaica will not deliver any sustainable levels of economic growth," he said, pointing out that there was need for "a productivity revolution" to drive the agenda.

JAMAICA'S BIG MUSCLES WILL BE CRITICAL - Lee-Chin

Billionaire EGC chairman, Michael Lee-Chin, acknowledging the concerns, has identified the "big muscles" of Jamaica, which he said will be critical to the growth agenda being a success.

"If we want to increase speed, we have to increase horsepower. The horsepower drivers of the big muscles that Jamaica has, not necessarily in order of priority, are tourism, mining, agriculture, and remittances."

He added: "Growth is going to come from us providing an environment whereby entrepreneurs can aspire, knowing that they can get equity and debt financing."

Remittances, which make up up to 15 per cent of Jamaica's GDP, are under threat over the ending of correspondent banking relationships, while just last month, the PIOJ reported declines in traditional agriculture export for the first quarter of this fiscal year.

 WE'RE BIG MUSCLES, TOO - Seaga

Metry Seaga, the head of the Jamaica Manufacturers' Association, told The Gleaner that it is his organisation's view that the growth council is the 'symbol' of the growth agenda, and its steps will be critical.

But he was not pleased that Lee-Chin left out manufacturing in listing Jamaica's "big muscles", a point he said the chairman later rectified in a meeting.

"They (EGC) has not started any implementation yet - which is the critical component. We've had the talks, and God knows, we have had enough studies done in Jamaica that we don't need any more. Now, it's about the implementation," he told The Gleaner.

Regarding implementation, the growth council had an August 31 deadline to submit its project proposal to the Holness Cabinet, which will ultimately decide what is pursued and the oversight remit of the council.

THEY'RE DOING WHAT NEEDS TO BE DONE - Wignal

Donovan Wignal, president of the Micro, Small and Medium Sized Enterprises (MSME), is looking forward to the submission to Cabinet but stresses that whatever agenda is shaped by the council has to keep to IMF-imposed fiscal discipline.

"The financing of the MSME sector - they have been doing some stuff which I think is quite admirable - the whole issue of Development Bank of Jamaica financing, the rolling out of the training, capacity build for the sector. For the most part, they are doing what needs to be done," he told The Gleaner.

As part of its strategy, the Government followed through with a revised political promise of giving a tax break to thousands of Jamaicans - part of what Holness calls "putting more money in the pockets Jamaicans".

SOME HEAVY LIFTING TO BE DONE - Phillips

Plans like the tax break have not been welcomed by the opposition People's National Party's finance spokesman, Dr Peter Phillips, who has criticised it as a threat to the economic reforms. Phillips said his concerns stemmed from what he called a lack of action by the Government on some issues key to growth.

"There are still important elements, particularly in ensuring the continued downward movement of the debt and in relation to public-sector transformation, that will ensure not only greater efficiency but that the cost of the public sector is contained. The Government doesn't seem to be mobilising the country around the fact that there is some heavy lifting to be done," he said.

MAKE THE ECONOMY MORE ATTRACTIVE - Smith

In July, Caribbean Development Bank (CDB) president Dr Warren Smith warned that while growth is critical to improving the livelihoods of the region's citizens, the process must be sustainable and inclusive.

"You need to grow the economy; you need to do things to make your economy more attractive for private investment both domestic and international. You need to stop running large fiscal deficits (and) generate surpluses. You need to, generally, create an economic environment that is good for business and have the social safety nets in place so that you don't leave the people behind," he told The Gleaner in an interview.