THE IMF arrives today, just two short weeks after the signing of Jamaica’s first social partnership, now called the Partnership for Jamaica Agreement, on July 31. The outgoing head of Bank of Nova Scotia in Jamaica, Bruce Bowen, is also no stranger to the issue of partnership in Jamaica, as, like other key members of the financial sector, he has been at the epicentre of the negotiations over our debt, having now voluntarily participated in three debt exchanges on behalf of his bank. It should be noted that Mr Bowen has also been a supporter of huge number of other partnerships in Jamaica, ranging from helping Jamaica’s needy through expanding the charity activities of the bank’s foundation, helping to revitalise the training mission of the PSOJ-based Jamaica Institute of Financial Services, to supporting economic fora (such as those of the Jamaica Chamber of Commerce and many others) and everything in-between.
Just under three months ago, one of Mr Bowen’s contributions to our economic debate was to bring to Jamaica Bank of Nova Scotia’s chief international economist, Argentine national Pablo Breard, to give a speech on the international economic situation, as part of a “Cocktails and Conversation” Bank of Nova Scotia panel on Jamaica’s economy. Even more relevant, however, to the Jamaican audience than the acute grasp of the international economic situation that Breard demonstrated in that talk (and the sobering assessment of the local economic situation by his co-panellist Dr Adrian Stokes), was his insight –spoken with genuine humility as a brief visitor — as to some of the core issues Jamaica needs to be thinking about to make its reform programme a success.In a separate exclusive interview for the Jamaica Observer next day, Breard’s first key point was that “Jamaica needs to grow”. This seemingly obvious point summed up a much more complex assessment of where we are now — namely that our debt means that we have now run out of other options — which Breard described as his attempt to “provoke thought” rather than offer Olympian advice. It is also a point that is now coming up repeatedly in every meeting I have with international economic observers, who all argue that our decades-long status quo of negligible growth is no longer sustainable, and that Jamaica needs a growth policy that goes beyond mere austerity.In an echo of the speech that Professor Alvin Wint made as chair at the signing of the recent Partnership for Jamaica Agreement “there is nothing wrong with Jamaica that cannot be fixed by what is right with Jamaica”, Breard observed that, from his short visit, it was clear that: “Jamaica has all the people it needs to create the framework to create growth.” Recalling his conversations, and observation of some of the world leaders he has met in similar economic situations, Breard notes that the beginning is always for the leader to frankly acknowledge what the key issues really are, preferably in writing. This has in fact just occurred, and is well captured in the Partnership for Jamaica Agreement.The key, according to Breard, is then to be able to tell a genuine story of reform, to international investors and the markets, and to your own nationals. Brazil was in default on its debt, and in a general economic crisis for 12 years between 1982 and 1994, before it finally started serious structural reforms under Fernando Enrique Cardoso, the Brazilian president who preceded Lula in the mid 1990s. Indeed, many regard Cardoso as the true architect of Brazil’s turnaround in the last decade, as he analysed what were Brazil’s problems, and then articulated clearly what Brazil was going to do about them. His economic and social innovations were essentially adopted wholesale by Lula in his first term, when they came to fruition. As an aside, Brazil’s problem now is that it desperately needs a new round of reform, having exhausted all the benefits from its past reforms, which are in some cases decades old.Breard stresses that you first need to identify which issues are beyond your control: US growth and unemployment, forces of nature, demand for high-yield securities and international liquidity, and say energy prices. All the areas that you don’t control, however, don’t mean you can’t grow, as you now need to focus your efforts on what is within your control to fix.For example, the just-elected young dynamic Mexican President Enrique Pena Nieto, despite being a member of the old-time PRI (which had run the Mexican Government for most of the 20th century), has created genuine international excitement (some now think Mexico has the best economic prospects in Latin America going forward) by starting to tackle in just over six months serious structural reform issues such as breaking up monopolies, for example, in telecommunications and broadcasting, taking on their extremely powerful, corrupt unions to improve education, and implementing measures to encourage small businesses. All these are issues that were not dealt with in 12 years (two consecutive terms) of the supposedly reform-minded PAN party government, partly due to their lack of control of the Mexican Congress. Just this week, Mr Pena Nieto courageously proposed the extremely politically difficult reform of opening the historically closed energy sector to foreign investment. Although everyone knows the energy reforms won’t take place overnight, the fact that he is starting this attempt this early in his new term is an encouraging sign.Another good example mentioned by Breard is Turkey, which after an extremely severe banking crisis, turned around its economy through a strategy of export-led growth in the years since 2001 (including a number of other reforms to make the environment more business friendly). As a result, from a laggard economy suffering from a severe banking crisis (including very high interest rates), it has grown by more than five per cent per annum for most of the past decade, ended its stand-by agreement with the IMF in May 2008 (after numerous such agreements), and made its last payment to the IMF in May 2013.Breard advises that governments, and particularly their central banks, need a very aggressive strategy, what he calls “communicate, communicate, communicate”. In the case of Jamaica, the chief communications professional needs to constantly explain what Jamaica is doing and the benefits of economic reform as the world information transmission mechanism is now so fast. The challenges Jamaica now faces require a united front, with pro private sector policies that create growth, driven by all the “promoters” of Jamaica becoming “connected”, effectively singing from the same hymn sheet.This is not, in fact, primarily about finding investors, for example, on roadshows, but about communicating critical economic policy reform issues clearly to a global audience. For example, a paper on tax reform should have a one-page executive summary, because, Mr Breard says, “I only have time to read the ten-page paper if the first page enamours me”. Those undertaking tax reform in Jamaica should take note, as the almost infinite options for foreign investors worldwide means that simplicity will always win from a marketing perspective. The goal is to “educate everyone, even the pessimists”. The key is taking real care over the content, frequency and style of communication, reaching multiple audiences in multiple languages. For international investors, it is particularly important to feed the right information to key communications platforms such as Bloomberg, as bond buyers all focus on the information they provide.He emphasises that time is of the essence. The new Panama Canal will be operational in 2016. Jamaica is in the centre of a Caribbean basin region that is now moving fast and needs to shift its foreign policy focus to the growing regional market. As Professor Wint said recently, it will require “all hands on deck” to get us safely through the current storm.
HOUSE RULES
1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper – email addresses will not be published.
2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.
3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.
4. Please do not write in block capitals since this makes your comment hard to read.
5. Please don’t use the comments to advertise. However, our advertising department can be more than accommodating if emailed:mailto:advertising@jamaicaobserver.com.
6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.
7. Lastly, read our Terms and Conditions and Privacy Policy
comments powered by
View the original article here
"Jamaica needs to grow"
Sean Mathurin -coordinator OECS Labour Market Information Systems programme