#GoodPolicyMattersEvenMoreWednesday, March 24, 2021
On March 9, 2021 Dr Nigel Clarke, Jamaica's minister of finance, opened the 2021/22 national budget debate. If ever there was a pivotal budget presentation this would qualify as it.
The backdrop was a once-in-a-century pandemic, 12 years of prudent financial management, and, justifiably, higher expectations of a brighter Jamaica.
Judging by the conversations and attention, Twitter's millennials and Generation Z audience were also paying keen attention to this presentation. It struck me as positively “unprecedented”.
To briefly backtrack, the 2020/21 budget presentation featured the Andrew Holness-led Administration's pursuit of capital events, which included the divestment of public assets (Wigton Windfarm, TransJamaican Highway) — the proceeds of which would be directed towards debt repayment and the lowering of Jamaica's debt-to-GDP ratio to 85 per cent or so.
In the 2020/21 fiscal year, the Jamaican Senate approved new legislation aimed at granting the Bank of Jamaica greater independence, including the creation of a monetary policy committee. This is a monumental development.
I came across the following: “I am still not used to good news in a Finance Minister's Budget Presentation. @drnigelclarkeja changed the game.” (@geraldlindo, 09.03.2021, 6:28 PM)
While I understand Lindo's perspective, my journey with positive sentiments stemming from a finance minister's budget presentation, and the Government by extension, began with the financial framework pursued by Minister Audley Shaw within the Bruce Golding-led Administration. Outcomes included no new taxes for the first time in recent memory (2018), the historic Jamaica Debt Exchange — much credit to the financial sector — single-digit interest rates — despite scepticism — and a continuation of prior policies pursued by Edward Seaga in the 1960s, which included the introduction of the Junior Market of the Jamaica Stock Exchange in 2009. The Junior Market is, without question, the single-greatest creator of tangible value in our local financial landscape of the past 20 years, at a minimum. The numbers speak for themselves.
LASCO Manufacturing (LASM), for example, in their financial year ended March 31, 2011, reported a revenue of $ 2,969,611,000, that grew 166 per cent to $7.8 billion as at March 31, 2020. Further, their corporate tax payments into government coffers over that period jumped by 242.7 per cent from $63,434,112 in March 2010 to $217,113,000 as per March 2020. Note, this would be separate from statutory deductions that would be a by-product of a growing workforce. What often goes unmentioned is the construction of a 65,000-square-foot facility in White Marl and the resultant increase in their workforce which has improved the lives of several Jamaican families. LASM is one of 40 companies to have listed on the Junior Market of the Jamaica Stock Exchange which served to reignite the Jamaican entrepreneurial spirit (some would say dream), which was lost during the financial catastrophe of the 1990s.
As I said then, and will say now, the introduction of the Jamaica Stock Exchange (1969), the Junior Market (2009), and resurrection of the Junior Stock Exchange in 2016, are deliberate policy positions of Jamaica Labour Party administrations and are by no means coincidental. This also extends to the divestment of government assets, with 2011's sale of Mavis Bank Coffee in one.
All said, good policies pursued through the aforementioned divestments and prudent fiscal policy (shifting toward indirect taxation which created tax surpluses) created a $90 billion war chest which was shifted from lowering debt towards the immediate needs of assisting the nation to fight the novel coronavirus pandemic.
The Bank of Jamaica is also due plaudits for the execution of policies that generated profits and a forthcoming payment of a $33-billion dividend to the Government, which will facilitate capital expenditure projects and further assist the COVID-19 Allocation of Resources for Employees (CARE) Programme.
Through this medium I have urged the Government to consider the pursuit a of post-COVID-19 recovery via continued investments (fiscal policy) in infrastructural projects with the potential for outsized returns and benefits to the average Jamaican. Seeing the ante turned up is great news!
The south coast highway will create convenient access to swathes of open land in St Thomas for construction, farming, and housing which are all considered areas of need at this time. The Morant Bay Urban Centre could form part of a special economic zone which I had posited in my submission in this very newspaper on September 15, 2020. I took careful note of our prime minister's stating that 12 such are under construction as we speak.
The Montego Bay Perimeter Road Project will also assist in a multiplicity of ways as it will ease traffic congestion, create access to real estate, facilitate infrastructural development. All of the above will likely cause surrounding asset prices to increase. It is said that the road to prosperity starts with a road, and it is very likely that this would create further prosperity for Montego Bay and its surrounding environs. This perimeter road would be self-funded by the Government, a task unheard of 10 years ago. It gives credence to the suggestion that some things have indeed improved locally.
All of the above are set to be achieved without external borrowing and, yes, no new taxes. The road ahead may be treacherous in parts, but one can be confident that better days are coming with steady hands at the wheel. The numbers bear it out. Rating Agency Fitch seems to agree, as it held Jamaica's rating at B+ with a stable outlook. Now that is good news!
Ryan Strachan is a stockbroker and president of Generation 2000 (G2K), the young professional affiliate of the Jamaica Labour Party. Send comments to the Jamaica Observer or email@example.com.
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