By Priesnell Warren

Jamaica concluded her 17th general elections on Thursday February 25, 2016. It saw the Jamaica Labour Party (conservative leaning) over turn the previous majority of 42-21 seats in the House of Representatives previously held by the People’s National Party (socialist leaning). In that context, it was a large reduction in gap, which lead to a very close victory margin of 32-31 seats.

Whatever the Government does, it must maintain the plan of action left in place by the previous administration. Jamaica’s economy continues to be fragile, despite relative stability compared to the 1990’s Finsac meltdown and during the 2007-2009 Global recession. The former government performed creditably on accounts of the economy. All IMF targets within the agreed memorandum of economic and financial policies (MEFP) have been met. The importance of which, cannot be negated. Inflation is at its lowest in 40 years. Leading to price stability, stable albeit low economic growth-averaging 1%, interest rate stability with the benchmark 30-day CD at 5.8 %, and a stable financial market. What remain lacking are high employment, serious debt reduction and a more stable dollar. As the debate about exchange rate stability continues, the former government along with some speculators has said the dollar has revalued under conditions of IMF requirement, while others disagree.

In light of this, the new administration must hit the ground running and work for the betterment of the nation. The history has been recorded and told; different political directions has swayed and evidently left the country in the middle of nowhere by playing tug of war. Yet, to this day no confirmed direction has been made as to where the country will go. Vision 2030 has not been sold to the population, with many unaware of what it is about. Notwithstanding, the country must first be stable if it is to grow.

Within their first 90 days in government, the current administration must set out to perform or implement the following Key Performance Indicators.

1. Sticking to the current IMF agreement with the benefits of staying on course outweighing the contrary. This is even more important as a couple of targeted tests were missed during the 2010 standby agreement. The current Extended Fund Facility (EFF) approved May 2013 will expire March 20, 2017, while the next review will take place in May 2016. This will reflect both the 11th and the 12th programme assessment. The change of government was taken in consideration providing time enough to quickly settle as the original date was scheduled for March 21, 2016. As a lender of last resort, the IMF deal comes with structural reforms discussed below, the surety of the current account, funding from the World Bank and IDB along with the possibility of accessing the international capital market.

2. The budget must be balanced. According to John Maynard Keynes a balanced budget brings with it benefits such as decreased rates of interests, increased savings and investments, reduced current account deficits and would lead to more sustainable growth. Jamaica’s debt to GDP ratio sits at approximately 124.7%. This becomes part of a larger drive to reduce the debt to sustainable levels by 2020 with a targeted number of 96% of GDP. A huge debt burden, ties up growth leaving less money to spend on key industries to spur growth and ultimately development.

3. Continue and more importantly, expedite structural reforms. These include Tax reform, Fiscal reform and Financial Sector reform. These benchmarks will improve the business landscape to enable both local and international companies to start and or grow their Jamaican operations. Moreover, these reforms will change how the public sector handles the peoples’ business and help to reduce recurring expenses. It must be underscored that the government’s main responsibility is to create the framework for private companies to create employment; a key objective in its economic policy package.

Chief among these objectives are the National Tax Compliance Plan a transition towards a more effective revenue system, Special Economic Zones to replace Free Zones and tax policy reforms-the removal of discretionary waivers (already tabled). Notwithstanding the use of an Energy Stabilization Fund that acts as a hedge towards volatile oil prices, a reduction in the wage bill amongst other recurring expenses. Strengthen gaps in the financial system, with more prudential standards for securities dealers and ongoing work to implement a financial crisis management plan. This is a positively proactive approach as opposed to times of the past. Overall, businesses should begin to have improved access to credit and cheaper energy through an energy reform diversification programme, an LNG power plant by JPS.

4. Rehabilitate the broken health system, user fees should be reintroduced. A political decision of no user fees has left many open wounds. At the end of it all, who will suffer from the political ball game that was and still is been played? The sector has seen an outbreak of Chickungunya Virus (Chick V), 19 babies dying from bacterial infections and all this is curtail by a lack of necessary equipment-to include beds and medication amongst other items. The need to reinstate user fees will facilitate those persons who can afford it to contribute revenue to the hospitals that would offset some of its costs. In the meantime, the present health insurance scheme can be enhanced to fully cater for the less fortunate among the population. On the other hand, many persons can afford user fees, however it is the medications that may prove too expensive to purchase.

5. Reform the education system, the Education Ministry’s mantra “Every Child Can Learn, Every Child Must Learn” is making progress with figures of approximately 88%. While Barbados and Cuba are almost 100% placing them in the top 5 world literacy rates. The impetus has been placed at the early childhood level, although improvements are needed at all stages especially among the unattached that have fallen by the way side. Programmes such as GFLT for primary students and A-STEP for adults have served to reduce these gaps, seeking to develop a reading culture. Although literacy and rates of matriculation has vastly improved, a lot more is necessary to get students job ready when they graduate. Education by its self does not lead to development, one need to earn and become a functioning member of the society. Youth unemployment stands at an alarming 38% according to Statin; please note this does not capture the discouraged worker (persons not actively searching for jobs, usually within the last 4 weeks). Proper career guidance is necessary at the secondary level and right through to the completion of university, in order to steer persons towards industries that currently have labour shortages.

Priesnell Warren is a Financial Analyst

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