Business

Jamaica's economic turnaround again highlighted in international media

BY ALEXIS MONTEITH
Observer writer

Wednesday, June 19, 2019

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Jamaica continues to be highlighted in the international media for its economic turnaround of recent years, with the latest article being printed in well known and respected Miami Herald.

The story entitled 'Jamaica once couldn't pay its light bill. Now its economy is welcoming Porsche and BMW' was penned by writer Jacqueline Charles, a Pulitzer Prize finalist and recipient of the 2018 Maria Moors Cabot Prize for her reporting on the Americas.

Charles notes in her piece that following on Jamaica's debt burden of US$20 billion in 2013, weakening international reserves, increasing poverty, low growth, and a situation where in 2013 “the national debt took up 54 per cent, or US$3.8 billion, of the country's budget”, Jamaica has dramatically improved its situation.

She cites the addition of new hotels in Kingston, the availability of luxury cars — such as Porsche in the market, the growth of call centres, “new luxury high-rises” and the “popping up” of Starbucks coffee shops as symbols of the island's economic recovery. She notes that “banks are extending credit and foreign investments are pouring in.''

Charles also presents her readers with the evidence in statistics and numbers, pointing to the fact that interest rates are at an all-time low and unemployment has fallen from 16 per cent in 2013 to eight per cent in the first quarter of 2019.

What were the initiatives that brought about a reversal on such a precarious economic path, she asked?

“Among the tough belt-tightening decisions that got it here: improving tax and customs collection; speeding up construction permits and business registrations; imposing a three-year freeze on public sector wages; privatising its main airport and seaport; and restructuring billions of dollars in domestic debt,” Charles writes.

One of the points that she emphasises in her story is the continuity of the reforms over two different political administrations which have presided over the economic turnaround.

Charles indicated that the reforms were started by the People's National Party (PNP), who negotiated with the IMF and signed a $US932-million loan which required the Government to “freeze public sector salaries for three years, implement a local debt exchange to bring down interest payments, reform the tax system, streamline tax incentives, and maintain a budget surplus of 7.5 per cent of gross domestic product”.

The Jamaica Labour Party (JLP) Administration that followed the PNP, Charles explains, actually campaigned against austerity but after being elected chose to continue and build on the reforms, signing a larger $US1.6-billion loan in 2016.

The additional reforms undertaken by the JLP “included providing a tax break to employees while raising the income tax on higher earners, and raising taxes on fuel, cigarettes and alcohol. Jamaica reformed the public pension to include employee contributions; closed, merged and privatised state entities; and reformed the central bank to not only make it more independent but to focus on controlling inflation”.

The writer enhances her report with insights and quotes from prominent personalities such as Uma Ramakrishnan, IMF mission chief for Jamaica, Minister of Finance Dr Nigel Clarke, and Brian Wynter, governor of the Bank of Jamaica.

Clarke notes that the successful reforms have given the nation space to plan for the long term. He also emphasises that the successes must benefit everyone, and points to the example of the removal of “burdensome” taxes for small and medium-sized businesses such as the asset tax and the minimum business tax.

But perhaps the most impactful quote of the story illustrating Jamaica's recent progress comes from managing director of Restaurants of Jamaica Mark Myers, whose business will be adding 10 more Kentucky Fried Chicken (KFC) restaurants to the 48 Pizza Hut and KFC outlets it has already.

“I was born in 1966 and I've never seen an optimistic, positive economy in Jamaica before,” Charles quotes Myers as saying. “Jamaica was always tough, headed in the wrong direction. Now, the environment is such that I actually see opportunity - real opportunity.”

Despite all the gains, the writer uses a substantial part of her story to stress that Jamaica still has a long way to go to secure real economic stability. Crime, income inequality, and corruption are threats to progress according to analysts, Charles reveals. She reinforces the point of inequality with quotes from ordinary citizens who are struggling to make ends meet.

One such person is a 24-year-old certified secretary Lenisia Gayle, who laments, “I want when I go to the supermarket to still have money left over.”

Statements are also included from a human rights advocate, Jaevion Nelson, who says that many people can only afford basic necessities and have to forego “leisurely things”.

IMF mission chief, Uma Ramakrishnan echoes the sentiment that Jamaica is not yet “out of the woods” because “while debt has come down from 147 to below 100 per cent of GDP, it is still a very high debt level”, but she goes on to say that even though growth is not where we would want it to be, it is moving in the right direction.

Charles ends her piece on a positive note, with the governor of the Bank of Jamaica insisting that job creation is taking place at an “unprecedented, steady rate” across different sectors of the economy, and can proceed even faster.

In the last two paragraphs she refers to the president of the Jamaica Chamber of Commerce, Lloyd Distant Jr, who offered: “we remain very bullish about the economy” and he lauds the Bank of Jamaica's lowering of interest rates to stimulate the economy as a “step in the right direction”.

The article has been mentioned on social media both by Prime Minister Andrew Holness and Clarke, who posted links to the story.

One comment from a reader in the Miami Herald said, “Ms Charles has done well in presenting two sides of the coin”, and another wrote, “you wait. This is just the beginning. Very few countries are poised for growth in the way that Jamaica is”.

The idea that the nation is progressing but still has hurdles to overcome is best summed up by a very short statement on Twitter in response to the prime minister's posting of a link to the article. The tweet reads, “yeah, but the crime ting…”


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