Good advice from the World Bank

Wednesday, June 20, 2018

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Going on the evidence so far, Prime Minister Andrew Holness is correct in stating that fiscal discipline is now a part of the DNA of the Jamaican Government, regardless of which of the two major political parties forms the Administration.

Indeed, Mr Holness, in his address to last week's Jamaica Investment Forum in Montego Bay, pointed out that during the years when Jamaica faced deep economic crisis, civil society, as well as the business and political classes, united to support prudent fiscal policies that led to business people these days not talking so much about fiscal issues but about growth.

“We now have economic certainty,” the prime minister said, adding that if he were an investor he would be happy with a country that has finally achieved that status.

“It was not easy,” he said; however, he emphasised that the Jamaican people made the sacrifice and he was sure that his audience would understand that a seven per cent primary surplus is not an easy task for any country. However, Jamaica, he noted, has done that since 2013.

The prime minister also pointed to the reduction of debt from 147 per cent of gross domestic product (GDP), saying that by the end of this fiscal year it is projected to go below 100 per cent of GDP. That, he suggested, was an index of the country's economic success.

The Government, he told his audience, is now at the point at which it intends to build on economic stability to get on the path of economic growth.

That is not something we can argue with. However, the Administration needs to take serious note of an appeal from the World Bank to put measures in place to stabilise Jamaica's ease of doing business rating.

That appeal came from Ms Catherine Masinde, practice manager at the World Bank's Global Business Regulation Unit, in her address to the same forum at which Mr Holness spoke.

“Since 2009, Jamaica made a lot of progress in improving its doing business reforms, but you can see that it ebbs and flows; and so my plea is, going forward, to have a systematic and a specific approach to reducing the cost of doing business through doing business rankings,” Ms Masinde said.

The World Bank stands ready to help Jamaica in this process, she assured, adding: “We have worked with many governments to make the process a little more consistent.”

Ms Masinde suggested that we could start by reforming how we get electricity and how we treat construction permits which, we know, is one of the sore points among investors.

The cost of energy is still too high and serves to give new investors cause to think twice. There are, of course, other obstacles to investment that need to be addressed, even as we acknowledge that the Government has made improvements in creating a business-friendly environment.

For, as Ms Masinde stated, Jamaica is on a trajectory of improving its ranking. However, we take her point that we need to do this “in a consistent manner”.

We expect that the Government will accept the World Bank's advice and offer of assistance, especially since Ms Masinde has stated that the agency has a methodology to help the country achieve this target.

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