World Bank vice-president praises Jamaica's economic turnaround in Miami Herald

Observer writer

Sunday, May 19, 2019

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The World Bank vice-president for Latin America and the Caribbean, Axel van Trotsenburg, recently contributed an opinion piece to the Miami Herald entitled 'Jamaica has made an “extraordinary” economic turnaround'.

The vice-president lauded Jamaica's revival at the macroeconomic level, and even referenced the Bob Marley quote “It takes a revolution to make a solution” to underscore the island's purposeful and aggressive economic reforms.

A committed undertaking by the Jamaica Labour Party and the People's National Party, through changes in administration spanning two election cycles, supported by the private sector and “sustained social consensus” helped to deliver a change in Jamaica's “growth trajectory”, according to van Trotsenburg.

Spurred by the country's debt approaching 150 per cent of gross domestic product (GDP) in 2013, the island's initiatives helped to convert decades of low growth into 16 successive quarters of positive growth nearing two per cent. The island's debt received an improved B+ rating from Fitch, unemployment sank to eight per cent, and the Jamaica Stock Exchange rose by over 380 per cent.

“The country has generated primary fiscal surpluses of at least seven per cent of GDP for the past six years and remains steadfast in its commitment to fiscal discipline,” wrote van Trotsenburg. “These fiscal results make Jamaica a top performer internationally.”

The vice-president also noted the backing from the the World Bank, the Inter-American Development Bank and the International Monetary Fund enjoyed by the Jamaican Government in the execution of its reforms.

“These efforts have paid off,” the World Bank official emphasised. “Jamaica is now one of the few countries that has successfully cut public debt by the equivalent of half its gross domestic product in a short time frame.”

He went on to mention three areas that must be improved in order to sustain the positive changes achieved so far. They are the country's economic and climate resilience, investment climate, and human capital.

He expressed encouragement that these areas which help to secure growth and promote an increase in jobs have already begun to be addressed through improvements in the area of public-private partnership investments, the contribution of the Public Financial Management Policy Framework for Natural Disaster Risk Financing which helps to make resources available for disaster recovery, and the work of the National Competitiveness Council which “has adopted a road map to fast-track reforms to improve the business environment”.

Financing from the World Bank to the tune of US$140 million will be made available to Jamaica to further “strengthen the economy, build resilience and support human capital development”, van Trotsenburg revealed to the Miami Herald's readers.

News of this funding has already been featured in the Jamaican media. It would be reasonable to suggest that the positivity expressed by van Trotsenburg in his opinion piece is a reflection of his organization's official viewpoint. Indeed, Jamaica's prime minister, Andrew Holness, believes that the recent financing from the World Bank is attributable to the bank's confidence in the country's management.

“So, in effect, there is a premium for good management, granted these funds are not grant resources, but it does show that the World Bank and other international development partners are willing to place their loan portfolios with us because we are managing our economy the right way, and these funds are usually at far better rates, concessional rates even than if we were to try and secure funding commercially,” the prime minister noted on The Office of the Prime Minister website last month.

“I am pleased to say that our partnership with the World Bank is strong,” he affirmed. “Very strong, actually.”

The website outlined that the loan package will help reduce the financial impact of natural disasters, bolster social initiatives for the vulnerable, and improve fiscal resilience.

Meanwhile, a joint statement by Jamaica's prime minister and the World Bank's vice president, published on The World Bank website, specified that US$40 million of the loan was “in the form of an investment operation for strengthening social protection and building human capital”.

The building of human capital is the theme with which van Trotsenburg ended his article in the Miami Herald. He acknowledged that while unemployment is notably low, too many of the Jamaica's youth are still in need of jobs. He believes there is still room for government, in collaboration with the private sector, to improve and foster an environment where young people can succeed in tomorrow's business through the advancement of their skills, particularly in technology and digitalisation.

“Today, more than ever before, young Jamaicans can dream of a brighter future,” he wrote in the final lines of his opinion piece. “This is the generation that must aim higher and can write a new chapter for its country.”

Axel van Trotsenburg's role as the World Bank Vice- President for Latin America and the Caribbean sees him overseeing the organization's relationship and dealings with 31 regional nations. He has previously served as World Bank Vice-President of Development Finance, Vice-President for the East Asia and Pacific Region and Vice-President for Concessional Finance and Global Partnerships.

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