Mega investments to boost growth past projections
Daraine Luton, Senior Staff Reporter
FINANCE MINISTER Dr Peter Phillips is indicating that the Government is anxious to get its mega projects under way so it can overperform on projected growth numbers.
Jamaica's macroeconomic outlook for the next four fiscal years has forecast growth of 0.8 per cent, 1.4 per cent, 1.8 per cent and 2.2 per cent.
Phillips said the mega projects have not been included in the country's medium-term growth projections.
Speaking during a Gleaner Editors' Forum last week, Phillips said the non-inclusion of the mega projects was not an indication that the Government was not confident they would be delivered.
"There is no downside to it. What you do is that you put in place what is in the ground," Phillips said.
Prime Minister Portia Simpson Miller has said the three mega investment projects to be implemented by the Ministry of Transport, Works and Housing would stimulate growth and generate employment opportunities.
The projects are the north-south link of Highway 2000, modernisation of the Kingston Container Terminal (KCT), and development of a new container terminal. A site has not yet been determined.
In explaining the reason for not including the projects in the growth projections, Phillips drew a parallel with the approach a banker takes when lending money.
"If you are a banker, a man can say I am going to pay you back the money because I plan to grow 25 acres of corn. If you are a banker, you would really take it.
"If he says to you, I have 25 acres of corn and they are going to be ready in six months, you can lend him money because the risk is less."
According to Phillips, in designing the programme, the most conservative estimates are used following stress testing.
"It is to our advantage to overshoot the growth numbers," Phillips said.
"We want to get those major projects under way so that we can overshoot numbers," the finance minister added.
The minister said in addition to tax reform, the Government has set public-sector reform as a major priority.
"One of the things that we have to put emphasis on is getting this public-sector reform effort focused on making for a more friendly business environment," Phillips said.
Jamaica, with debt-to-GDP at 150 per cent, has inked a second deal in three years with the International Monetary Fund (IMF) as it seeks to implement economic reform.
Efficient public sector crucial
Phillips said it was critical that the Government be able to provide a "secure and efficient public sector that gets out of the way of the person wanting to do business".
"If we don't do these, you are just left with fiscal consolidation, which is, by its nature, contractionary, and not good enough, does not have the motor force to take us out of it," the finance minister said.
Meanwhile, Phillips appears unperturbed about the pace at which the mega projects have been rolling out.
"I don't think we are moving slowly," Phillips said, while noting that there is interest in a request for proposal for the integrated resort development.
The request for proposal process began on June 1 and was made possible under the Casino Gaming (Application for Declaration of Approved Integrated Resort Development).
The integrated resort development consists of a mix of various tourism amenities and facilities in the same precinct, including, but not limited to, hotels, hotel rooms, villas, casinos, attractions, sporting facilities, entertainment facilities, service centres, and shopping centres.
Phillips noted that a memorandum of understanding has been signed in relation to the port expansion, and the logistics hub. He said the enterprise team was working apace for the divestment of the KCT.
The aim of the divestment is to capitalise on opportunities which are expected to come about through the expansion and modernisation of the Panama Canal due to be completed in 2015.