Jamaica is well on the way to recovering from the economic abyss it was submerged in a few years ago.
Peter Phillips, the country’s finance and planning minister, delivered the positive news at a luncheon last week hosted by the Canadian Council for the Americas at the National Club.
Two years ago, Jamaica reached an agreement with the International Monetary Fund (IMF) for a four-year loan that provides the Caribbean country with access to international financial flows and the best opportunity to restore confidence and embark on a path leading to a stronger and brighter future.
“The real economy is responding positively and the labour force and employment have increased since the start of the program with positive signs, particularly for youth employment,” said Phillips. “Inflation for the last fiscal year was four per cent as compared to 8.3 per cent in the 2013-14 fiscal year. That in fact represents the lowest inflation outturn for 48 years. The net income reserves stood at US$2.4 billion at the end of April, the debt to GDP (gross domestic product) is trending down from 140.7 per cent that it was at the end of 2013-14 and the foreign direct investment flows have increased 3.2 per cent to 5.3 per cent in that period.
“We have successfully completed seven quarterly reviews on the extended fund facility program with the IMF. The fact that I am here and the fund mission is completing the eighth review in Jamaica is an indication of the comfort level we feel with the likely outcome of that review.”
With Jamaica in a severe economic depression five years ago, Phillips said the country had no option but to turn to the IMF.
“In 2011-12, the national debt moved by 68 per cent and our per capita income was the same as it was in 1970,” he said. “Over the same period, the debt increased by 600 per cent with an average rate of economic growth of less than one per cent per annum. This was the challenge that we faced. Other issues made the economic reform program urgent. By virtue of inherited disagreements with the IMF and the multilateral community, lending from those institutions had ceased. The previously existing stand-by arrangement went awry, there was rising unemployment, the current account and fixed deficits were out of control and we had an unstable public sector environment. It has not been easy, but Jamaica has made significant progress.”
A national security minister for six years in former Prime Minister P.J. Patterson’s cabinet, Phillips said the government intends to create an economic environment that will allow enterprising investors to organize the efficient production of goods and services for domestic consumption or export.
“There are challenges remaining,” he said. “The central one is to build on the levels of growth that have been achieved. We are still faced with fragile global economic conditions and we still face the need to sustain the reform effort locally. Growth is essential if we are to maintain the social consensus that has emerged about the need for far-reaching economic reforms. One of the things we have done to sustain this consensus is that we have introduced an economic program oversight committee in Jamaica after the banks, which had to endure domestic debt restructuring, and the trade unions whose workers had been asked to endure a wage freeze, all said we need assurances that we don’t go this way again. We said the best way to do this is to form a group that has access to all of our accounts.”
A Fulbright Scholar, Phillips said agriculture is the fastest growing sector, tourism continues to thrive with a six per cent fiscal growth in the last fiscal year and the business process outsourcing industry, which is poised for take-off, will generate hundreds of jobs and augment the country’s economic development.
In addition, the Jamaican government recently signed a three-year concession agreement for the privatization of the Kingston Container Terminal and shortlisted five bidders for the privatization of the Norman Manley International Airport.
“All of this investment in infrastructure is critical to our overall effort to leverage Jamaica’s geographic location so that it becomes one of the main logistic hubs of the contemporary world economy,” he said. “We are the first port that you reach as you exit on the Atlantic side of the Panama Canal and we are equidistant from the main markets of North and South America.”
While in Toronto and Ottawa, Phillips and his delegation met with federal officials to discuss ways of assisting Jamaica in its efforts to address its debt servicing and external financial challenges.
The delegation, which included Bank of Jamaica governor Brian Wynter, financial secretary Devon Rowe and Helen McIntosh who is Phillips’ technical advisor, also held discussions with local businesses interested in investing in Jamaica.