In his address to the 15th Regional Jamaica Stock Exchange Investments and Capital Market Conference on January 23rd, 2020, Finance Minister Dr Nigel Clarke noted that this was only the second time that Jamaica had successfully completed an Imternatinional Monetary Fund (IMF) programme in 57 years.

He rightly argued that the positive global coverage of Jamaica in the overseas financial press – Financial Times, Wall Street Journal, Bloomber,g etc, was unprecedented, while noting also the local press coverage in chronicling our amazing turnaround.

He further argued that recent credit rating upgrades by the two largest agencies, Moody’s and Standard and Poors, had allowed Jamaica to achieve its highest ratings in 10 to 20 years, depending on which agency you used.

Since his speech, the third major international rating agency ,Fitch, has also upgraded Jamaica again.

He correctly argued that the price of Jamaica’s bonds (referring to our internationally issued US Eurobonds) have “long been reflecting our increased credit rating”.

As at March 2019, he advises our debt to GDP ratio was 95 per cent, and the 60 per cent target in another five years is now, in his words, “firmly in sight”.

He described how proud he was to see the Jamaican flag flying at the New York Stock Exchange, recognising our historic performance, something that as a young equity derivatives trader working at Goldman Sachs many years ago “he never would have imagined”, and which he argued “speaks volumes to what Jamaica has achieved”.

He described the Government of Jamaica as seeing itself as the “partner and ally” of the Jamaica Stock Exchange (JSE), which is “intrinsic to modernising the economy”.

As part of this, he observed, a clear change in the mode of privatisation had already occurred. In the past, he advised, companies, such as Norman Manley International Airport, would have been privatised through competitive “private” bids. Now, the Government wants to share the “value created” through privatisation with the wider Jamaican population, and, “where possible, wants to privatise through the JSE” using a “bottom up approach”, where micro investors get shares before small, and small get shares before big, allowing “more people to have a stake in the Jamaican economy”.

He observed that as Jamaica deleverages, the Jamaican Government is making assets available for the funds released. For example, the imminent Trans Jamaica Highway Initial Public Offering (IPO) will be “the largest IPO Jamaica has ever seen”.

OVERSEAS ROADSHOW

In fact today, Trans Jamaica Highway will begin its overseas roadshow for the international debt financed portion of the offering, with Swiss bank UBS having been chosen as the sole bookrunner.

For Minister Clarke, our equity markets are “integral for the future of Jamaica”, and there will be special carve outs for large institutional investors such as pension funds, reflecting no doubt their many thousands of Jamaican beneficiaries.

He notes that for the past 25 years Jamaicans were not able to participate in the phenomenal gains from investments in our major infrastructure assets by our foreign partners, which he said will change going forward.

As further examples, he advised the Government’s 20 per cent stake in JPS will shortly also be brought to market, followed by an IPO of the Jamaica Mortgage Bank. With respect to the latter, he noted that during our time of instability, there was a need to intervene by the Government owning such assets, which in “today’s Jamaica is no longer needed”.

He noted that unemployment as of October 2019 was at a record low of 7.2 per cent, reflecting the creation of over 100,000 net new jobs over the past few years. While the third quarter growth rate of 0.6 per cent was not what they wanted, looking behind the numbers, it reflected the decline in bauxite which employed only a few thousand people out of a total labour force of 1.25 million.

Excluding the “ups and downs” of these two goods producing sectors, mining and agriculture, over the past four years nine out of our 11 sectors had grown every single quarter, split between our four goods sectors, and seven service sectors.

Tourism, manufacturing and construction were all seeing significant employment growth, and although government construction had been affected this year by slow execution for example, of the South Coast Highway, next fiscal year it should pick up, due, amongst other projects, to the start of the Montego Bay “ring road” bypass.

The good employment numbers were also confirmed by the growth in tax revenues, and most other areas. He argued, correctly, that it was important to look at the bigger picture in an economy like ours with “old sectors”.

Another key encouraging statistic in the employment data was the virtual elimination of the gender gap, which had fallen from female unemployment being nine per cent higher than male to only 2.6 per cent today (8.6 per cent female and six per cent male).

So, as he put it, “while this government had been good for all Jamaicans, it had been particularly good for women”, which he argued was important “given the dynamics of the Jamaican household where when women are employed” the entire family will do well.

In the question and answer period afterwards, Minister Clarke observed that in his view the asset tax on financial institutions “was not a good tax” as it was “distortionary”, agreed that it was meant to be “temporary” but noted that it “brings in a lot of revenue” and did not offer a timeline for change.

He declined to respond to a question on the completion of the Finsac report, and argued with respect to a question on corruption that Jamaica did better than many of its peers, particularly in Latin America and the Caribbean.

Mexico, for example, he noted, had just got around to mandating an integrity declaration for government officials whereas Jamaica has had one for years.

In responding further to the question, he noted the new Integrity Commission, the relatively newly independent MOCA (now with independent policing and prosecution powers), and the expected improvement in the governance of the boards of State owned enterprises from the recently passed act of parliament (regulations now needed to be passed) which would create requirements for much more transparent and experienced board of directors of government enterprises.

http://www.jamaicaobserver.com/article/20200131/ARTICLE/200139966