It’s election season in the Caribbean. Suriname and Guyana have changed their governments, Trinidad and Tobago has stuck with the PNM and on September 3rd the people of Jamaica will decide if they are sticking with Labour or if the People’s National Party will be returned to power.
If I were a betting man I would predict a JLP victory, if only based on the recent polling results and also Jamaica’s economic progress over the last five years.
You see in 2013, Jamaica embarked on an ambitious reform program to stabilize the economy, reduce debt, and fuel growth.
According to the World Bank Public debt fell below 100% of GDP in 2018/19 from a high in 2013 of 150 percent of GDP. Jamaica’s debt is expected to decline below 60% by 2026/27 in line with the provisions of its Fiscal Responsibility Law. This was pushed back to 2026 from 2025 as the country’s Parliament passed the law to make the change in light of the challenges to the economy posed by the Covid 19 crisis.
Jamaica’s unemployment fell to a historic low of 7.2% in October 2019, which is almost half the rate at the start of the reform program.
The country’s Stock Exchange went up more than 380 per cent and credit agency Fitch upgraded the island’s debt to B+ rating with a stable fiscal outlook..
These are all impressive numbers especially when you consider that T&T has gone in the opposite direction. This country has run deficits now since 2008 when the late Prime Minister Patrick Manning was in power and the financial crisis hit T&T.
The country’s spending on transfers and subsidies was doubled under the People’s Partnership government and while the last Rowley administration has reduced the subsidy on gasoline it has not been able to dismount the transfers and subsidies from the tiger’s back.
An important element in the success of Jamaica according to the World bank was a strong commitment across political parties, over two competing administrations and electoral cycles. The country also critically benefited from a sustained social consensus for change and the strong backing of the private sector.
This is a crucial lesson that we must learn and at time of writing this Prime Minister Dr Keith Rowley had not yet been sworn in and therefore the country had not yet been told who is the new Finance Minister.
I was recently invited by the Trade and Economic Development Unit of the University of the West Indies to be part of a panel discussion on the economic realities of the next five years and as I said then, make no mistake this country is in serious economic strife and would require exemplary leadership if we are to claw ourselves out of this difficulty.
It is why the new opposition and government must work together to get the necessary reforms passed for the more effective and efficient collection of taxes and the other administrative reforms needed. This is not just a time for healing it is a time for espri de corps, for a steadfast focus on fiscal discipline, diversification, social justice, digitization and crime fighting straregies. The government and Opposition must set country goals which both must commit to and it must not be about all the spoils going to the winners, even though the population has given the PNM its support to continue in office.
Jamaica has generated primary fiscal surpluses of at least seven per cent of GDP for the last six years, and remains steadfast it its commitment to fiscal discipline.
So in seven years of discipline, political continuity and staying the course Jamaica has pulled itself out of challenge and is now a more prosperous country. It is true the PNP lost power and is facing the real prospect of ten years in opposition but the country is better off for it.
As we have consistently highlighted Jamaica features in the top 20 countries in the world for its comprehensive credit reporting systems and ranks among the best globally in the area of starting a business, according to the World Bank’s 2019 Doing Business report. It only takes two procedures and three days for an entrepreneur to start and formally operate a business.
T&T must improve the ease of doing business not in five years but with a laser type focus, must do so by 2022 .
Even in the midst of the COVID-19 crisis, construction, often seen as a signal of growing aggregate demand in an economy has been booming in Jamaica.A lot of the Jamaica construction is driven by confidence in the tourism sector, an area of the economy we continue to ignore, and it is also due to remittances sent back by Jamaicans to build houses in their land of birth.
Trinidad Cement Limited, and by extension local well paid manufacturing jobs, has to thank Jamaica for its ability to keep its head above water as it has seen major exports to the Northern Caribbean island and also the ramping up of construction in Guyana at a dime of little activity here in T&T. The roadmap to recovery committee identified construction projects as one way of kick-starting the economy and it is hoped that the government could both ramp-up its own construction while at the same time assist the private sector in getting the necessary approvals and reducing the bottlenecks to the building process.
This will trickle down to the many skilled and unskilled workers who are seeking to earn a living in the sector and it will also benefit TCL as well.
Today is the second working day for the new administration and the first Cabinet meeting. With the challenge of COVID-19 and an energy sector all but on its knees one hopes that the fresh thinking will permeate the Cabinet room and that there will be increased energy from what is likely to be a younger looking Cabinet.
Dr Rowley has already promised to transition from politics and if he lasts the full five years it will be the longest consecutive period the PNM has been in power since 1986 and he and his team can blame no one else for this economy. Perhaps a look to the North may bring about some readily available solutions and allow the Prime Minister to leave a legacy when he retires from office.