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Editorial | Deal with corruption to cement economic reforms

Published:Monday | June 17, 2019 | 12:00 AM

This newspaper has been commenting favourably on the positive developments in the Jamaican economy over the last six years. Some of the more noteworthy achievements include: unemployment falling to a 40-year low; inflation being below the four-six per cent target set by the Bank of Jamaica; public debt falling to 97 per cent of gross domestic product (GDP); improved fiscal balance, allowing the Government to provide tax breaks; and GDP growth inching above 1.5 per cent per annum.

These macroeconomic improvements follow the strong implementation of the very tough 2013 Extended Fund Facility agreement with the International Monetary Fund (IMF), and which was replaced in 2016 by the current Standby Arrangement (SBA). The turnaround of the country’s macroeconomic fortunes is, to a great extent, rooted in the economic policy consensus across the two major political parties. The success flowing from this consensus gives hope of improved prospects in tackling the three-headed monster of corruption, cronyism and crime plaguing the country.

The IMF, and the international community in general, while taking note of the economic successes, have not failed to speak about the need for greater resolve to achieve better governance, cutting fraud and corruption in the public sector, and modernising the police force to tackle rampant crime and growing social disorder.

The IMF Executive Board, in April 2019, in its fifth review under the current SBA, stated directly that “public-sector governance shortcomings should be immediately addressed”. The IMF was sufficiently alarmed at the degree of breakdown, that it made specific recommendations for immediate action:

(i) Empowering the Integrity Commission.

(ii) Passing regulations to solidify a transparent and competency-based process for appointments to public bodies boards.

(iii) Migrating funds from the Government’s commercial bank accounts to the Treasury Single Account (TSA) and closing those accounts.

(iv) Reducing the number of public bodies.

There has been no explicit acceptance of the IMF recommendations by the Government of Jamaica. We do note, however, that the proposals are not dissimilar to ones made by the Government in the past. For example, the commitment to have competency-based boards was given by Finance Minister Nigel Clarke when he became minister. Since then, we have not heard much about the plans for implementation.

Most of the boards of the public bodies are becoming due for reappointments after the third year of the administration. There is every likelihood that with an election due within two years, not much reform in this area will take place. The Government may well feel the need to have the current crop of ‘safe hands’ in charge of boards leading up to elections.

We note with alarm some of the questionable practices of the former Petrojam board and management just before the last local government elections. The Government has given no assurances that there will be no repeat.


The Government’s lack of urgency or expression of indignation about recent revelations showing possible fraud and poor governance in various public bodies is alarming. The revelation that the Caribbean Maritime University is using public funds to hire lawyers to block investigations into fraud and corruption adds a new dimension to the problem of poor governance in Jamaica.

The tolerance for these corrupt practices could undermine the successes of the economic programme. Economic growth that is heavily dependent on cronyism and corruption will likely feed into greater levels of crime and disorder in the society.

The strong warning from the IMF about the need for improved governance reform needs to be taken very seriously if we are to cement the economic gains. Jamaica’s recovery is still quite fragile. Debt to GDP, at close to 100 per cent, is still much too high. If there is a perception of a dramatic breakdown in governance, and sentiments shift against Jamaica, capital flight and disinvestment can take place quickly. This sobering fact should spur the Government to continue to build on its reforms of fiscal and monetary arrangements. It must tackle governance reforms to stem fraud and corruption vigorously.

It would be a national calamity if the degree of sacrifice the Jamaican people made to achieve the economic turnaround went up in smoke due to a failure to act urgently to deal with growing levels of corruption, cronyism and crime. Lack of urgent action could see the Government becoming a danger to its own success.