Editorial: The PM must be the czar
You scent danger for an economy when politicians believe they are better at allocating resources, including private people's own, than markets. Jamaica's leaders attempted that trick for the better part of half a century with mostly unhappy results: a huge public-sector debt and anaemic economic growth.
That is why this newspaper, at this time, appreciates Prime Minister Portia Simpson Miller's wariness of recent calls for the creation of an ill-defined Cabinet post referred to as a growth czar. Our view is that the most important thing the Jamaican Government can do to encourage economic growth is create an environment in which the private sector feels it is worthwhile to risk its capital. Government behaviour has to be predictable.
In that respect, the administration has been largely on the right track, adhering to the policy pledges it made in Jamaica's economic support agreement with the International Monetary Fund. Of course, the exchange-rate adjustments it has allowed, and fiscal discipline required to maintain a primary surplus of 7.5 per cent of gross domestic product (GDP), have not been painless. But there are also signs of success.
For instance, as the administration borrowed less, leaving more capital available to the private sector, the Government's debt turned on a downward trajectory, falling nearly 10 percentage points since the start of the programme, to 139 per cent of GDP. With help from international conditions, inflation, below five per cent in 2014, was at its lowest in 48 years. The current deficit has nearly halved in three years to under seven per cent of GDP. Jamaica has also made significant gains on global indices measuring competitiveness and the ease with which business can be done.
These advances have not gone unnoticed. Though not gushing, foreign direct investment is showing signs of recovery. And perhaps more critically, the domestic private sector is having renewed confidence in Jamaica. For instance, in the first quarter of this year, the Jamaica Chamber of Commerce found businesses to be at their most optimistic in six quarters. The confidence index at the end of March was nine points, or 7.3 per cent up, on the prior quarter and at its highest since mid-2007.
Growth, projected at only 1.6 per cent this year, remains slow. There, however, may be too great an expectation, given the time lag between reform and substantial growth-related economic activity, especially in the context of the Government's inability to engage in the kind of Keynesian interventions - on which some insist - unless it returns to the deficit spending that did us in in the first place.
If there is to be a czar in the Government, it has to be the prime minister. Mrs Simpson Miller is responsible for the coordination of the efforts of her ministers to ensure they deliver a cohesive policy that makes the economy conducive to business, investment, and ultimately, growth.
If she is to give special attention to anything, it must be the acceleration of the economic reform project, with emphasis on the overhaul of the public sector and the removal of red tape.
But the prime minister must have the will to fire underperforming ministers, which means a good bunch of the current crop.