Mon | Oct 23, 2017

The way forward for regional economy

Published:Friday | December 16, 2016 | 12:00 AM
Finance Minister Audley Shaw.
Brian Wynter, governor of the Bank of Jamaica.
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Panelists at the second annual LatinFinance Caribbean Finance and Investment Forum were united in the view that the Latin America and Caribbean (LAC) region should be moving towards ensuring their economies encourage investors to do business.

The NCB Capital Markets (NCBCM)-sponsored event, held recently in Montego Bay, St James, brought together leaders in banking, finance and investment as well as think-tank organisations in the region to explore possible avenues to economic improvement, with special focus on the elimination of obstacles to achieving that goal.

The discussions, led by representatives of LatinFinance, a prominent source of in-depth information on financial matters related to the LAC, explored the fiscal environment of the closing financial year and the way forward.

Keynote speaker at the event, Minister of Finance Audley Shaw, set the tone for the first panel, speaking to how well the region, and Jamaica in particular, has progressed in terms of strengthening the capital markets infrastructure. He highlighted the results of World Doing Business Report 2016, which places Jamaica 64th overall, but 7th in terms of the ease of accessing credit and 9th for ease of starting a business.

Shaw cautioned, however, that there has been a noted decline in the corresponding banking relations that enable key financial processes such as foreign direct investments (FDI) and remittances from the diaspora.

 

Risks

 

"This is the result of institutions restricting or limiting business relationships with certain categories of customers, or de-risking. This, in turn, creates the risk of increasing vulnerability; high-risk banking could be removed from the financial sector all together. To address this, the Government has been assuring all its partners that various regulatory frameworks are standardised," Shaw said.

Meanwhile, governor of the Bank of Jamaica (BOJ), Bryan Wynter, said progress towards complete economic recovery will be laboured until governments recognise that private businesses are best able to identify risks and opportunities and make decision on how to deploy capital. He explained that governments may step in once the businesses have exhausted their efforts of reducing risks and regional volatility.

During the discussion, panelists argued that the current uncertainty in the economy was partly caused by Donald Trump's recent win in the United States presidential election. Some financial experts said it could upset the already limited balance afforded by certain policies and regulatory frameworks, making it a major concern for the region's recovery.

Countering this point, Steven Gooden, chief executive officer, NCBCM noted that, from his assessments, the changes ahead are unlikely to be as radical as some anticipate. He further noted that the associated risks may be reduced as there is significant liquidity, which can result in observable improvements in market conditions.

Known for its uncommon approach to strategising using alternative investment solutions, like its promotion of equity financing through NCB Capital Quest and the recent GWEST sale and 'lease back' with the option for a buy-back agreement, NCBCM sees great opportunities.

"It is the perfect time to invest. Once there is clarity in policy direction, we will be able to better understand the path forward. This is an opportunity for greater regionalism and cross-bordering between the Spanish- and English-speaking Caribbean," Gooden said.

He also said that there is a vast potential for recovery and appreciable growth, but it is hindered by old regulations that do not accommodate integrated economies, in terms of trade.

Other panelists included Vice chairman of corporate and investment banking at Citibank, Jay Collins; senior emerging markets portfolio manager at Invesco Ltd, Sean Newman; head of sovereign research at Oppenheimer & Co Inc, Nathalie Marshik; and head of emerging markets trading at Jeffries Group Investment Banking Co, Adam Groothus.