President of the Private Sector Organisation of Jamaica (PSOJ), Christopher Zacca, has underscored the importance of implementing the agreement with the International Monetary Fund (IMF), but said the fiscal consolidation central to it was, by itself, not conducive to economic growth.
Economic growth is now of the highest priority, he said.
"This growth needs to be equitable. It must reach small and large businesses and it must create jobs. It needs to be entrepreneurial at its core. It cannot be state capitalism or statist in its nature, and it cannot rely on a few large infrastructure projects alone," said the PSOJ president.
But he said that, to move to real growth, Jamaica first needs a stable foundation.
"This was why it became so important for us as a country to secure an IMF deal, despite the fact that it would have affected all levels of the society," he said at a Partnership for Jamaica forum at the Hugh Lawson Shearer Trade Union Education Institute at the University of the West Indies last Thursday.
Referencing the National Debt Exchange and the three-year public-sector wage restraint, the PSOJ president said, "these great sacrifices by our entire society absolutely underscore the need to realise serious and sustainable economic growth, not in the next few years, but right now".
However, he said, "the only way we can do so is if we finally tackle our tremendous debt overhang".
But Zacca, noting that fiscal consolidation was not enough to fuel economic growth, said, "the key will be to replace reduced Government spending with greater private-sector investment and increased business activities."
However, he further emphasised the need for economic growth, arguing that a failure to grow the Jamaican economy "is the single greatest reason for most, if not all, the ills we suffer from as a nation, including crime, substandard education quality, a deterioration of institutional capacity, and, maybe most worrying, a growing income gap between the rich and the poor".
Also addressing the forum was Professor Alvin Wint, UWI pro-vice-chancellor and one of the architects of the Partnership for Jamaica agreement.
He said that, in arriving at the agreement, the partners examined areas where Jamaica ranked very poorly to the rest of the world, particularly as it relates to areas that were important to growth and development.
The primary factor was that Jamaica had a long history of fiscal instability that has translated into very high levels of debt, to the point where, today, Jamaica has the third-highest level of debt relative to its gross domestic product of any country in the world.
"But it's actually much worse than that because the two countries that are ahead of Jamaica are in very different situations," Professor Wint said.
He said the number-one country in terms of debt is Japan, which has a debt-to-GDP ratio of close to 200 per cent. But he explained that Japan is particularly unique in that virtually all of that public debt is owed to its citizens.
"And the country has an extremely high savings rate. So, what you find is a very difficult debt situation which is something that is completely manageable within its own parameters," he added.
The second country is Greece, which has a debt-to-GDP ratio of about 160 per cent.
"But of course, Greece has some help because it is part of the European Union which has made a commitment to stand behind Greece and to provide them with funding to get out of their debt situation," said Wint.
The third country is Jamaica, "and we have neither the circumstances of Japan nor do we have the circumstances of Greece," he said.
"So we are in many respects the most vulnerable indebted country in the world today."
He said, "it is not only a problem because of the level of debt, but it is a problem because, when you look at the factors that are important to growth and develop-ment, one of the key areas that economists have looked at worldwide is that situations where the level of government consum-ption is very high in a society, those tend to be situations where countries don't grow and develop".