Jamaica between crisis and opportunity
IT has become conventional wisdom in the West that the Chinese word for crisis is a paradox, meaning both danger and opportunity. Whether this is true or not, at this time Jamaica faces both danger and opportunity.
It is now just over 200 days, twice the 100-day international benchmark, since the new People’s National Party Administration came to power. Whilst 100 days, or even 200 days, is an artificial benchmark in terms of measuring the success of an Administration, it is generally accepted that you should make your tough decisions at least by the end of your first year in office, as it only gets harder thereafter.
We are now approaching the end of July, and moving into the traditionally dead month of August, with no discernible progress as yet on the status of a new IMF agreement, despite the arrival of another team here on Monday.
We are also at a real benchmark of sorts, which is the repayment today of the euro200 million Eurobond. It appears this will be met mainly through borrowing from the domestic banking system, rather than by accessing the international capital market through the issue of a new bond.
The key issues — tax reform, and the reduction of the public sector wage-related expenditure, including pension reform and a programme of public sector rationalisation — are not new. Indeed, in many ways they are not only holdovers from the previous Administration, but the Government that preceded them.
In a real sense, therefore, any IMF agreement becomes a device to make us do what we know needs to be done. Importantly, however, it also includes access to vital multilateral financing. In the current international environment, with the global economy seemingly weakening almost every day, there is nothing to be gained by waiting to year-end to finalise a new IMF agreement.
Indeed, waiting too long incurs the distinct danger that, just like putting off a doctor’s appointment, it could make any necessary pain much worse. For example, the deal that may be available to the unions now may no longer be possible in a potential crisis scenario next year.
The opportunity is for Jamaica to use tax reform to create a tax policy that encourages future foreign investment, and to so improve our general ease of doing business to make Jamaica one of the star countries for attracting foreign investment.
This is not easy work, as it requires both political will and strong technical skills in implementation. However, if Stalin’s birthplace — the former ex-Soviet Union republic of Georgia — can do it, while still suffering from the legacy of communism, it can be done in Jamaica. If landlocked Rwanda, still wounded by the aftermath of its genocide, can do it, so can Jamaica.
On his recent visit to Jamaica, the chairman of China Communication Construction Company (the parent of the now locally famous China Harbour Engineering Company), Mr Zhou Jichang was very clear on the opportunity that Jamaica’s location presents, particularly after the completion of the Panama Canal expansion in 2014.
These opportunities include being the third largest English-speaking country in this hemisphere, with the excellent and improving telecommunications required by business process outsourcing. There are many others, none of them new.
As we approach our celebration of the 50th anniversary of political Independence, it is time that we agree to finally focus all our efforts on the task of achieving economic independence.
Whether this opportunity is taken will determine whether the Jamaican economy continues to stagnate, or uses the occasion of our celebration of Independence to begin a new path of high growth. Otherwise, to paraphrase what used to be said about Brazil, “Jamaica is the country of the future, and always will be.”