When it comes to reducing the country's debt-to-GDP ratio, this has truly been an effort by the Jamaican people and successive administrations to bring their fiscal house in order. The country has gone through significant fiscal adjustment that has brought down debt from 147% of GDP in 2013 to just about 100% today, a remarkable achievement by international standards. Moving forward, debt reduction will continue to be anchored around a debt-to-GDP ratio of about 60% by 2025/2026. This anchor has guided the fiscal path since the Fiscal Responsibility Law was enacted and subsequently strengthened in 2014. The guiding principle of fiscal policy has been to achieve that objective, as committed to by the government and people of Jamaica, while channeling spending toward growth-enhancing and social welfare-boosting projects. In fact, while debt has come down significantly, Jamaica is not out of the woods yet; it must still remain vigilant in the coming years. The Jamaican government has entrenched fiscal discipline and carried out important institutional reforms for the Jamaican economy, including, at this particular juncture, modernizing the central bank. The IMF was impressed during its September 2018 review by the country's strong program implementation; the Jamaican government continues to move aggressively on its reform agenda. The fundamentals of the economy are extremely strong. However, there is scope for the financial sector to unleash more funding to the private sector.
Apr. 4, 2019
Constant Lonkeng Ngouana
Resident Representative for Jamaica, International Monetary Fund (IMF)
General Manager & Country Representative Jamaica, Inter-American Development Bank (IDB)
We are part of the trifecta of multilateral support for Jamaica: the IMF, IDB, and World Bank. Jamaica has been following an IMF program since May 2013, and the IDB has helped Jamaica put its fiscal responsibility law in place. This will help Jamaica maintain fiscal sustainability in the future; it is important that Jamaica continues to reduce its debt and keep interest rates low. Our main focus right now is on additional structural reforms to make Jamaica a competitive economy, including through the modernization of the public sector, energy efficiency, disaster preparation, and financial readiness (also having a contingent credit line in the event of a major natural disaster). When it comes to disaster resilience, the important aspects to focus on would be having a disaster management framework in place and making sure that financial insurance is there if disaster strikes. Our partners span all parts of the government. The contingent credit line was established in 2018, and we are active in another set of reforms to embed disaster risk management into the DNA of the government and its agencies responsible for disaster management. When it comes to increasing digitization, the Office of the Prime Minister is responsible for the national identification system (NIDS). However, government must become more electronic, modern, and efficient. Many branches of government have limited access to data from other agencies, so introducing data interoperability across all parts of government is key. One model we are looking at is Estonia.
General Manager Strategic Services Division, Development Bank of Jamaica (DBJ)
The bank has three key areas that it focuses on. One is micro-, small- and medium-sized enterprises (MSMEs) development, under which we are developing the ecosystem for our MSMEs. We have programs geared at improving MSMEs' ability to access financing such as grants to build their capacity and guarantees for businesses with limited access to traditional collateral. These will cover up to 80% financing for MSMEs, allowing more entities to get access to loan funds in Jamaica. In 2018, we hit JAD2 billion worth of guarantees to the SME sector, enabling access to billions in investment, a huge achievement from our end. Our second focus is providing support for the privatization of government assets that can include either selling assets directly to the private sector or creating public-private partnerships. For 2018, one of the biggest successes was the privatization of Norman Manley International Airport. This was a difficult transaction that we did on behalf of the government, but we are elated that it took place. The third focus is filling market gaps in the financial sector. For example, in financing businesses, interest rates have hovered around 14-15%, but we offered loans at preferential rates of 9.5%. This policy is aimed at encouraging banks to lower their rates to support the MSME sector. We are addressing other market gaps in regulatory advocacy. The Pensions Act, for example, prevents pension funds from investing in private equity and venture capital companies, which we are working hard to change by March 2019.