Jamaica's economy can bounce back stronger - Clarke
Paul Clarke, Gleaner Writer
Finance and the Public Service Minister Dr Nigel Clarke says implementation prospects for economic recovery will depend on the ability to effectively coordinate an "ambitious" range of policies, programmes, and legislation.
His conclusion was made as part of the 138-page Economic Recovery Task Force Report tabled in Parliament on Tuesday.
Clarke said that the COVID-19 crisis has unveiled social fragilities that need to be addressed for Jamaica to recover sustainably and with greater resilience.
He added that the country’s cumulative growth history over the last 20 years, with stagnant per capita income, should motivate Jamaicans to embrace reform.
He said that although pre-COVID-19 unemployment was at a historic low of just above seven per cent, the majority of households lacked wealth.
“As such, within budget capacity, the Government of Jamaica's social support interventions will need to continue in the short term, even as the social safety institutions are strengthened over the medium term,” Clarke said.
“... To be clear, Jamaica’s challenges predate COVID-19. The pandemic has simply put the spotlight on these issues, and magnified the scope and complexity of the policy responses required.”
The report highlights that the crisis therefore presents the opportunity to 'embrace reform with ambition'.
It further states that the aim is to also address the fundamental gaps that have been exposed by COVID-19 and exploit the opportunities the crisis offers.
“In other words, we must do better. We must embrace reform with ambition to be on a better footing as recovery takes hold and in so doing, we have to be cognisant of the historical fact that past recoveries have taken a decade or more,” Clarke said in the report.
The pandemic hit Jamaica harshly, with the Planning Institute of Jamaica projecting that the economy will contract by between four per cent and six per cent in fiscal year 2020-21 versus a pre-COVID forecast of 1.2 per cent growth.
According to the report, the contraction is driven by the global impact of the pandemic on key economic drivers, such as tourism and supply chains, and the necessary measures implemented by governments around the world aimed at containing the spread of COVID-19.
The report outlined the Government’s economic policy response, which included a $31-billion stimulus consisting of approximately $15 billion in tax cuts and spending stimulus of $16 billion (originally $10 billion).
In addition, health expenditure of $6 billion and public body support of $3 billion contributed to a total fiscal intervention of approximately $40 billion. This is outside of measures taken at the Students' Loan Bureau (payment deferrals and processing fee waivers), National Housing Trust (interest rate reductions), and other initiatives.
The primary fiscal surplus has, therefore, been relaxed from 5.4 per cent of gross domestic product (GDP approved for FY 2020-21 to 3.5 per cent of GDP to accommodate the emergency expenditure.
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