It is no accident that the third Latinfinance Caribbean Finance and Investment Forum will be held in Jamaica at the Pegasus hotel tomorrow as, after long decades of malaise, Jamaica finally appears to be one of the shining stars of the Caribbean region.

In his presentation on “Opportunities for Local Financing of Jamaica’s infrastructure Development” for the Claudette Crooks-owned local investment firm Money Masters yesterday, Daryl Vaz, minister without portfolio in the Ministry of Economic Growth and Job Creation, outlined many of Jamaica’s current positives, ranging from our meeting all our IMF targets (including very healthy net international reserves) to falling crime (particularly murder) and unemployment.

He reiterated the emphasis of the current Government on win/wins with the private sector, freeing up government resources through privatisations (noting the commitment of Finance Minister Nigel Clarke to broad-based ownership, eg the planned Wigton Wind Farm initial public offering) and Public Private Partnerships (PPP’s) to allow it to pursue its core activities.

He observed that, contrary to popular belief, 70 per cent of the transactions arranged by the Development Bank of Jamaica since 2009 have been with local investors. He added that the relaxation of the investment limits on pension funds was “top of the list” for Clarke, who was very aware of the Economic Growth Council’s “strong arguments” on this issue.

In addition to outlining some recent projects, he emphasised new planned areas for PPPs as including education and health, eg a School Solar Energy PPP, various Ministry of Health projects, the long-awaited Caymanas project and performance-based non-revenue arrangements for the National Water Commission.

Vaz added that the Government would also be looking at PPPs on a much wider scale eg water, sanitation and urban transport, observing however that “we are not there yet”.

He saw huge potential in medical tourism, referencing amongst other things recent developments in Canada, and advised that a Cabinet submission on reviving downtown Kingston was coming, based on the Government Square concept of locating services downtown around the future Parliament site.

Interestingly, the Latinfinance Forum occurs almost exactly 11 years to the day after a national planning summit, “Jamaica Tomorrow,” organised by the Private Sector Organisation of Jamaica (PSOJ) in November 2007.

PSOJ President Chris Zacca worked with then Prime Minister Bruce Golding to have the summit exactly two months after the JLP’s election victory, which had ended their 18 years in the wilderness.

It is worth reviewing briefly where we were then, compared to where we are now.

All of Jamaica’s private sector entities were represented, as well as the majority of the new government ministers, key civil servants, key embassies, multilaterals and civil society.

As outlined in my November 2007 article for Latinfinance on the summit, “Jamaica Gets Down to Business”, the situation at the time was described by the then president of our leading independent think tank CAPRI, John Rapley, as follows : “The country’s challenges are many and daunting: a runaway murder rate, rampant corruption, declining labour productivity, low growth and high borrowing costs. All the same, a cautious optimism seems to be spreading through the country. It is like the alcoholic who wakes up in the gutter and decides he really will change his ways. The new Government seems to be crystallising some hopes for real change.”

Jamaican entrepreneur Michael Lee Chin, owner of Jamaica’s largest bank NCB, and now chairman of the Economic Growth Council, observed in 2007 that “We have an overt courtship of the private sector, both local and international, to come to Jamaica, stay in Jamaica and create wealth in Jamaica. Wealth creation is the panacea to Jamaica’s problems.”

In his opening speech for the then summit, Golding told the audience he had risen at 3.30 in the morning to read all eight of the policy papers prepared for the summit. These included the seven papers which informed the seven breakout teams assembled from the meeting participants on balancing the budget/debt reduction, governance/reducing bureaucracy, tax reform, job creation and investment promotion, land titling reform, education and training and crime and violence/justice, as well as a special paper “From Celtic Tiger to Carib Tiger — Lessons from Ireland” describing their 1987 turnaround.

Some of the plans from that time may sound familiar.

Prime Minister Golding had planned to set up a private sector-dominated monitoring committee to review progress, headed by a CEO from the private sector who would report to him. Golding had also intended to create a single agency comprised of all the relevant authorities that evaluate building applications to shorten the approval process, so that any developer against whose plan the authority has not registered an objection within 90 days will be entitled to proceed with the development. He also intended to create performance targets for each agency of the state.

However, as noted in the same article, the new government got no honeymoon, with the majority of new ministers engaging in firefighting from their first day in office.

The most notable immediate problem was a much higher-than-planned budget deficit due to previously unbudgeted expenses of around two per cent of GDP. Post-election, the deficit had appeared likely to reach nearly seven per cent of GDP, compared with the original target of 4.5 per cent of GDP, before corrective measures were taken.

In an interview with former finance minister Omar Davies at the time, he argued that the issue of the budget overrun was receding in importance compared to the other significant problems Jamaica then faced, including the effect of higher prices for oil and foodstuff on the balance of payments and domestic prices, damage to roads from months of rain, the coming expiration of a memorandum of understanding (MOU) with the unions the next March 31, and that “the outstanding issue of raising the income tax threshold will also have to be dealt with“.

In addition, he added, there was no quick fix to the problem of Jamaica’s very high debt in the absence of debt forgiveness or restructuring.

It turns out he was right. Jamaica’s very high debt, then above 140 per cent of GDP when the new Government came to power, the global financial crisis (which most still did not realise had already started), the huge spike in oil and food prices in 2008, as well as dealing with the unions’ understandable desire for wage catch-up after four years of austerity, meant that the next four years would be extraordinarily difficult for Jamaica and its new Government.

However, today, a critical mass of what was outlined at that summit in 2007 is finally happening.

The most important step is that the budget has finally been balanced, and consequently, our debt-to-GDP ratio should fall below 100 per cent this year. The balancing the budget/debt reduction committee — chaired by Minister without Portfolio in the Ministry of Finance Don Wehby — had key objectives which included getting low-cost multilateral funding, balancing the budget, passing and enforcing a fiscal responsibility act, prioritising capital investment for growth-inducing infrastructure, divesting non-core assets, reducing exposure to variable rate debt, reducing vulnerability to shocks and increasing confidence, and critically reversing the crowding out effect from high domestic interest rates.

All of these, and more, have now happened, with Jamaica now having the lowest interest rates in generations, with its short-term interest rate currently below that of the US, something which most Jamaicans did not expect to see in their lifetime.

Another key summit committee was job creation and investment promotion. This included the objective of developing Kingston as a major distribution/logistics/freezone and light manufacturing centre, and developing Kingston/Portmore as the ICT back office centre of the Caribbean, This area also appears to be making significant progress, with BPO particularly finally starting to catch up with its long foreseen potential.

The other key areas identified — crime, education, bureaucracy reduction, tax reform and land titling — can best be described as work in progress, and in any case deserve their own articles. Nevertheless, it is fair to describe Jamaica as finally “getting down to business” using the title supplied by Latinfinance’s editor in 2007, making their conference here particularly well-timed.