Editorial | We welcome Mottley’s warm embrace

With all the cash sloshing around Jamaica looking for potentially profitable ventures into which to settle, some of its owners will, hopefully, have been listening to Mia Mottley, the prime minister of Barbados. She has invited them to the Eastern Caribbean, including to her country.

“I’d like to suggest that the region cannot be having a problem with growth without coming together to see how best we can move across borders to be able to allow instruments and bonds issued in one CARICOM territory to be marketed and used by citizens and entities in other CARICOM territories,” Ms Mottley told this week’s investment conference, organised annually by the Jamaica Stock Exchange.

Ms Mottley may have an insular reason for her call. Her country, which used to have a reputation as among the region’s most fiscally prudent and economically stable, has found itself in dire straits, having been slow to recover from the Great Recession of a decade ago.

The Government’s gross debt, now at around 116 per cent of GDP, had peaked at 157 per cent. Growth has been sluggish. It is this year expected to reach no more than 0.1 per cent as Ms Mottley, who came to office less than a year ago, implements the stern adjustments demanded under a loan agreement with the International Monetary Fund. So foreign direct investments and other inflows, insofar as capital from CARICOM could be deemed to be foreign, would be a boon to Barbados.

But that doesn’t make the broader merits of Ms Mottley’s argument any less compelling. Nor does it undermine the worth of her invitation to Jamaicans, who, over the past two years, have invested more than J$15 billion in listings in 2018, plus billions more in real estate. Some of the invested funds would have come from the more than J$550 billion Jamaicans hold in pension funds, of which no more than five per cent can be held in foreign-currency investments.

Ms Mottley’s observations are significant to Jamaica on multiple fronts. One of these is that Jamaica, not long ago, was where Barbados now is. We used to be the region’s economic basket case, until the economic reform project, now extended across two administrations, began seven years ago.

HEADING IN THE RIGHT DIRECTION

Most macroeconomic indicators are heading in the right direction and business confidence is high. This, in part, is reflected in the spate of domestic investments in equities and real estate, no doubt helped by the unease some owners of capital feel about the politico-economic developments in metropolitan markets, including the potential fallout from Brexit and America in the age of Trump.

Further, Ms Mottley is the CARICOM prime minister who has responsibility for transitioning the region’s customs union into a genuine single market and economy, whose logic is insuperable. The sum of CARICOM’s 15 relatively small economies is greater than their individual parts.

At the very least, with CARICOM right’s of establishment for community nationals and the free movement of capital between member states, regional investors have an opportunity to operate outside of home markets.

In this regard, Jamaica has an advantage for the provision of services, and, potentially, in financial mediation. Indeed, recent investments by Jamaican financial-services companies, including National Commercial Bank’s acquisition of the Port-of-Spain-listed Guardian Holdings, is reversing the trend of two decades ago at the time of the collapse of Jamaica’s financial sector.

This southward flow of some of Jamaica’s capital ought not to be something to be frightened about. Profits will reflow to Jamaica, some of which will be invested in domestic enterprises.

Moreover, as Ms Mottley suggested, a cross-border unleashing of private savings, estimated at US$47 billion, will help to lift all ships. But the issue, as she said, is to remove the impediments that prevent or slow such moves.

We believe that it is in Jamaica’s interest to be at the forefront of these efforts.