Excellent article in the Gleaner about the Air Jamaica divestment:
Air Jamaica: How the divestment is being done
Monday, February 22, 2010
Thursday, February 11, 2010
Now that we have the IMF pact...
Source: Jamaica Observer
Wednesday, February 10, 2010
When it concluded an agreement with the International Monetary Fund (IMF) and a deal with holders of government debt, the Bruce Golding administration fundamentally changed Jamaica's economic policy of the last 25 years.
While not discounting the devastating impact of the global financial crisis on key sectors, such as bauxite and remittances, poor macroeconomic policy and equally poor economic management are largely responsible for our low growth and high government debt.
The antecedents of the economic crisis date back in some instances to the 1970s. Borrowing to finance growth, a failed policy, was started during the oil crisis of the 1970s, enlarged by Mr Edward Seaga in the 1980s and was a tenet of policy during the regime of Dr Omar Davies. It reached a point where it was not sustainable.
Not having a borrowing relationship with the IMF was held up as asserting sovereignty and demonstrating our capacity to manage our own affairs. Messrs Michael Manley, Seaga and PJ Patterson terminated the use of IMF loan facilities which involved measures which any prudent government should implement without being compelled.
The tectonic shift in economic policy has occurred under duress, but the fact that it took six months longer to conclude the negotiations with the IMF is a serious indication of the very weak technical capacity of the Government to formulate and execute economic policy.
With regard to economic management, it cannot be business as usual. The Government's economic management capacity must immediately be considerably upgraded.
A start has been made, but a great deal is left to be done. Where there was no capacity some has been installed, eg, the Ministry of Finance, and where there was high interest rate fundamentalism, pragmatic leadership has been imported, eg, the Bank of Jamaica.
The Planning Institute of Jamaica (PIOJ) needs a new head and this time round we must break with the pedestrian. The new director-general must be a high-calibre economist who must have the courage to say what needs to be said and not what the political leadership wants to hear. He/she must transform the PIOJ into the think tank that it has not been since the days of Mr Don Mills and Mr Gladstone Bonnick.
A financial controller needs to be appointed in the Ministry of Finance to ensure that the IMF targets are met, as well as the fiscal management which evaded Mr Don Wehby. This person must have the responsibility of co-ordinating the inflows from multilateral financial institutions, in particular, the World Bank, Inter-American Development Bank and the European Union.
A weekly status report must be provided to the finance minister and the prime minister. The person does not have to come from the public sector. Skilled people from the private sector should be considered. They must have the right attitude, maturity and leadership qualities. They must approach working in Government with recognition that while there is no embarrassment of riches, there are dedicated, hard-working, patriotic and competent civil servants.
New thinking is required if Jamaica is to emerge from the economic crisis, and we should not be afraid to look for fresh ideas from abroad. There are several world-renowned Jamaican economists living and working outside Jamaica. Ironically, their advice is sought all over the world except in Jamaica. But essentially, the Government should avail itself of the advice of any expertise regardless of nationality.
Wednesday, February 10, 2010
When it concluded an agreement with the International Monetary Fund (IMF) and a deal with holders of government debt, the Bruce Golding administration fundamentally changed Jamaica's economic policy of the last 25 years.
While not discounting the devastating impact of the global financial crisis on key sectors, such as bauxite and remittances, poor macroeconomic policy and equally poor economic management are largely responsible for our low growth and high government debt.
The antecedents of the economic crisis date back in some instances to the 1970s. Borrowing to finance growth, a failed policy, was started during the oil crisis of the 1970s, enlarged by Mr Edward Seaga in the 1980s and was a tenet of policy during the regime of Dr Omar Davies. It reached a point where it was not sustainable.
Not having a borrowing relationship with the IMF was held up as asserting sovereignty and demonstrating our capacity to manage our own affairs. Messrs Michael Manley, Seaga and PJ Patterson terminated the use of IMF loan facilities which involved measures which any prudent government should implement without being compelled.
The tectonic shift in economic policy has occurred under duress, but the fact that it took six months longer to conclude the negotiations with the IMF is a serious indication of the very weak technical capacity of the Government to formulate and execute economic policy.
With regard to economic management, it cannot be business as usual. The Government's economic management capacity must immediately be considerably upgraded.
A start has been made, but a great deal is left to be done. Where there was no capacity some has been installed, eg, the Ministry of Finance, and where there was high interest rate fundamentalism, pragmatic leadership has been imported, eg, the Bank of Jamaica.
The Planning Institute of Jamaica (PIOJ) needs a new head and this time round we must break with the pedestrian. The new director-general must be a high-calibre economist who must have the courage to say what needs to be said and not what the political leadership wants to hear. He/she must transform the PIOJ into the think tank that it has not been since the days of Mr Don Mills and Mr Gladstone Bonnick.
A financial controller needs to be appointed in the Ministry of Finance to ensure that the IMF targets are met, as well as the fiscal management which evaded Mr Don Wehby. This person must have the responsibility of co-ordinating the inflows from multilateral financial institutions, in particular, the World Bank, Inter-American Development Bank and the European Union.
A weekly status report must be provided to the finance minister and the prime minister. The person does not have to come from the public sector. Skilled people from the private sector should be considered. They must have the right attitude, maturity and leadership qualities. They must approach working in Government with recognition that while there is no embarrassment of riches, there are dedicated, hard-working, patriotic and competent civil servants.
New thinking is required if Jamaica is to emerge from the economic crisis, and we should not be afraid to look for fresh ideas from abroad. There are several world-renowned Jamaican economists living and working outside Jamaica. Ironically, their advice is sought all over the world except in Jamaica. But essentially, the Government should avail itself of the advice of any expertise regardless of nationality.
Monday, February 8, 2010
In uplifting Jamaica, we all play a role
It is often said, that to whom much is given, much is expected. As Jamaican professionals, we have the responsibility to utilize our knowledge, skills and talents to positively impact the political, economic and social conditions within our beloved Jamaica. Whether it is through supporting our family back in the homeland, collaborating on research initiatives that delve into important issues like sustainability and energy conservation, designing innovative business models and technologies to stimulate economic growth, or participating in charity events that provide funds for deserving and disadvantaged school children, we have a variety of tools in our arsenal to contribute to the uplift and development of Jamaica. This year, JAMPACT will focus on concrete ways for contributing to the social and economic development of Jamaica through an insightful discussion series.
This past January, JAMPACT, in partnership with the Consulate General of Jamaica, New York, launched a discussion series titled, “The Quest for Growth: Unlocking the Keys to Jamaica’s Economic Growth and Development.” Over the course of the upcoming year, through a series of discussions and public forums, we will conduct a comprehensive and critical review of the policies, investment opportunities, and business climate in Jamaica, while also discussing the challenges to sustainable economic growth. Ultimately, our goal is to stimulate discussion and initiate the sharing of potential pathways and strategies to Jamaica's economic progress. In the process, we hope to inspire and motivate all of us, as members of the Diaspora, to contribute to the development of Jamaica.
On Thursday, January 21st, we hosted the first installment of this series in a panel discussion titled, “The Business of Good Citizenship.” The spirited and engaging discussion covered the importance of good citizenship, as demonstrated through our involvement in not only the upcoming 2010 U.S. Census, but also mentorship programs that can enable us as young professionals to help guide and develop the next generation. Our panelists included Consul General, Geneive Brown Metzger, Irwine Clare, Senior Partnership Specialist and Team Leader for the 2010 U.S Census, and Donald P. Vernon, Esq., Managing Partner of Vernon and Associates, P.C.
Though many perceptive comments were shared, a few comments were especially noteworthy. The Consul General stressed the importance of fostering a respect for oneself and family, as well as a responsibility and commitment to the interests of Jamaica. Mr. Clare emphasized the importance of participating in local institutions, stating that without empowering communities here, our capacity to develop communities in our homeland is seriously diminished. Mr. Vernon emphasized the importance of addressing systemic and institutional structures—and most importantly, the possible problems within these structures—that may hamper development in Jamaica.
We look forward to hosting more panel discussions in the future, and we encourage you to join us! Please stay tuned for more information on our next general body meeting where we will host our next panel discussion.
Jamelia N. Morgan is a Board Member and Committee Chair for the Think Tank Committee of JAMPACT, Inc. She can be reached at thinktank@jampact.org.
This past January, JAMPACT, in partnership with the Consulate General of Jamaica, New York, launched a discussion series titled, “The Quest for Growth: Unlocking the Keys to Jamaica’s Economic Growth and Development.” Over the course of the upcoming year, through a series of discussions and public forums, we will conduct a comprehensive and critical review of the policies, investment opportunities, and business climate in Jamaica, while also discussing the challenges to sustainable economic growth. Ultimately, our goal is to stimulate discussion and initiate the sharing of potential pathways and strategies to Jamaica's economic progress. In the process, we hope to inspire and motivate all of us, as members of the Diaspora, to contribute to the development of Jamaica.
On Thursday, January 21st, we hosted the first installment of this series in a panel discussion titled, “The Business of Good Citizenship.” The spirited and engaging discussion covered the importance of good citizenship, as demonstrated through our involvement in not only the upcoming 2010 U.S. Census, but also mentorship programs that can enable us as young professionals to help guide and develop the next generation. Our panelists included Consul General, Geneive Brown Metzger, Irwine Clare, Senior Partnership Specialist and Team Leader for the 2010 U.S Census, and Donald P. Vernon, Esq., Managing Partner of Vernon and Associates, P.C.
Though many perceptive comments were shared, a few comments were especially noteworthy. The Consul General stressed the importance of fostering a respect for oneself and family, as well as a responsibility and commitment to the interests of Jamaica. Mr. Clare emphasized the importance of participating in local institutions, stating that without empowering communities here, our capacity to develop communities in our homeland is seriously diminished. Mr. Vernon emphasized the importance of addressing systemic and institutional structures—and most importantly, the possible problems within these structures—that may hamper development in Jamaica.
We look forward to hosting more panel discussions in the future, and we encourage you to join us! Please stay tuned for more information on our next general body meeting where we will host our next panel discussion.
Jamelia N. Morgan is a Board Member and Committee Chair for the Think Tank Committee of JAMPACT, Inc. She can be reached at thinktank@jampact.org.
Round Two: Recent developments of the Jamaica and IMF billion dollar loan agreement
Ayana Allen
31-Jan-10
Thirty-three years after first borrowing from the IMF; fourteen years after finally being able to terminate the borrowing agreement; and nine years after Stephanie Black’s American documentary “Life and Debt,” the Jamaican Government returns for a second shot at financial recovery though a $1.25 billion loan under a 27-month stand-by agreement with the IMF.
The IMF was expected to approve or reject the loan agreement the last week in January, but delayed the announcement until the government agreed on two loan preconditions. The first precondition requires
The Jamaican Debt Exchange, the second precondition, consists of government bondholders returning their high interest earning bonds for bonds with lower yields and longer maturities. The government is waiting for the last 9 percent of bondholders to get on board to reach 100 percent cooperation of the program—which is expected to save the government billions in interest payments.
In January members of the opposition party challenged the government’s thorough review of the loan agreement, leading many to believe officials were more focused on passing the letter on to the IMF for approval than carefully reviewing conditions of the agreement.
The government believes approval of the agreement will lead to an additional $1 billion in funding from other international financial institutions.
In a press release the IMF outlines its plan to increase public finance responsibility, reform public sector employment and strengthen the tax structure, at the cost of increasing taxes and cutting public sector salaries and other spending. The agreement will also allow the government to increase social safety net spending to protect
When the government first borrowed from the IMF (the lender of last resort) through a stand-by agreement in 1977 the organization required Jamaica to devalue its currency, remove tariff barriers to trade, and freeze wages. Such details may be visible in the fine print of the current loan agreement that Jamaicans at home and abroad are concerned about.
Update: On Thursday, February 04, 2010, the International Monetary Fund (IMF) approved
Ayana Allen is a senior journalism major at the
Saturday, February 6, 2010
IMF return no easy ride; Shaw says hard work and sacrifice ahead for Jamaicans
Source: Jamaica Gleaner News (February 6, 2010)
FINANCE MINISTER Audley Shaw says the country's return to the International Monetary Fund (IMF) will mean "hard work and sacrifice" by Jamaicans.
FINANCE MINISTER Audley Shaw says the country's return to the International Monetary Fund (IMF) will mean "hard work and sacrifice" by Jamaicans.
The multi-lateral lending agency on Thursday approved a 27-month stand-by arrangement, paving the way for the country to borrow up to US$1.27 billion to support its medium-term economic programme and cope with the consequences of the global downturn.
"The agreement marks the commencement of a challenging, but decisive journey towards good governance, solid economic development and the restoration of hope for all Jamaicans," Shaw said in a statement on Thursday.
Jamaica rushed to the IMF for balance-of-payment support after turbulent world economic conditions crippled several sectors, bringing economic activities to a crawl.
The approval of the stand-by arrangement is expected to generate about US$1.1 billion in funding from other international financial institutions.
A disbursement of US$640 million is now available to Jamaica. The IMF on Thursday said that part of this first disbursement would be used to establish a financial stability support fund aimed at supporting the country's financial sector.
Coerced into trading
Financial institutions were coerced into trading in high-yielding government bonds for longer-term and lower-interest papers under a debt-exchange programme as Government moved to tighten the fiscal accounts.
Government had also announced a $22 billion tax package in December to rake in revenue, bringing to $46 billion in new taxes announced this fiscal year.
The finance minister said the moves were necessary in order to set the stage for financial boom.
"All members and sectors will share in the tremendous sacrifice before us as together we lay down an economic framework conducive to investment, job creation, increased productivity and the generation of significant foreign- exchange earnings," Shaw said.Monday, February 1, 2010
Wage demands threaten debt exchange gains
From the Jamaica Gleaner News Online
The Buckley Report
February 1, 2010
The Jamaica Teachers’ Association (JTA) must be in another world. Last week media reports indicated that the teachers’ union was preparing its two-year wage claim for Government.
This, when the International Monetary Fund is on the verge of signing a 27-month stand-by agreement with the Jamaican Government. The agreement calls for, among other things, the freezing of public sector expenses which by extension includes salaries. Also, as part of budgetary constraints, the Government has announced that the allocation for tertiary education will remain at 2009/2010 levels, which means it’s likely that tuition fees for students at the University of Technology, and the University of the West Indies are likely to go up. The prospect of this prompted UWI students to demonstrate preemptively last week.
So against this background, I view the move by the JTA at puzzling. Is the JTA not part of the discussions the Government has held with the Jamaica Confederation of Trade Unions under the memorandum of understanding?
Paying the JTA and other public sector employees higher wages will only reverse the gains of the Jamaica Debt Exchange programme and push the Government to borrow from the local market at increased rates; so we’ll be back at square one.
It is, therefore, critical for Government to keep inflation low in order to discourage pressures for increased wages. This means keeping the foreign exchange rate stable, as well as being prepared to roll back the latest petrol tax if the price of oil rises significantly on the international market. Government should also tread carefully in the proposed increase of property taxes and user fees in government agencies.
Warning: if inflation rises significantly, then local investors will begin to demand higher returns on their investment income. We’ll be back at square one.
What say you?
Policies must be developed to counter impact of economic crisis on youth - UNESCO official
The need for governments, particularly in the Caribbean and Africa, to develop policies that will counter the impact of the global economic downturn, and climate change, on young people in these regions, has been emphasised by Assistant Director General for Social and Human Sciences at the United Nations Educational, Scientific and Cultural Organisation (UNESCO), Mr. Pierre Sané.
Speaking at a meeting of Caribbean Ministers with responsibility for Social and Sustainable Development, at the Jamaica Pegasus Hotel, New Kingston, on January 24, Mr. Sané stressed that both crises posed serious implications for societies and their people, particularly the youth.
"The youth, not just in this (Caribbean) region, but also in my own region, in Africa, are paying the price for an economic crisis which is nothing of their doing.and will be paying the price for climate change, for which they have no responsibility. If the youth, to whom we are going to pass on the (baton), lose hope, and are confronted with a future for which they see no way out for them, then, believe me, we are sitting on a time bomb," he contended, citing the need to keep the hopes and aspirations of this group alive.
In this regard, Mr. Sané pointed to a CARICOM Summit, scheduled for Paramaribo, Curacao, next week, to review work co-ordinated and undertaken by Co-Chairman of CARICOM's Commission on Youth Development, Professor Barry Chevannes, noting that "UNESCO is very encouraged and committed to supporting this initiative."
"I'm also encouraged by the participatory work that Professor Chevannes has undertaken in order to collect the views of the youth in the Caribbean. Six thousand youth have been part of this exercise. Therefore, what the Caribbean will examine next week is really the voice of young people in the region," he said.
Mr. Sané is also optimistic that the Ministers with responsibility for youth affairs would share UNESCO's concern of the need to address issues impacting this group "as a matter of priority," through the development of adequate and sustainable public policies, "that will allow the next generation to inherit a world, as we have inherited from the previous generation, that was better than the world before."
The three-day forum, which concluded on January 26, was staged by the Government, in collaboration with UNESCO, under the theme: 'Social Development Strategies for the Caribbean Youth in the context of the economic crisis'. It was attended by over 30 dignitaries, delegates and officials from 14 regional states, who participated in discussions and dialogue on policy responses to the financial and economic crisis impacting the region, particularly the region's youth, deemed among the stakeholders worst affected.
Source: JIS
Publish Date: January 27, 2010
Interim Results of The Jamaica Debt Exchange (JDX)
Under the Jamaica Debt Exchange (JDX) the Government of Jamaica has received submission forms, which are subject to verification, from holders aggregating more than 90% of the bonds eligible for the transaction.
Submission forms were still being submitted late yesterday (Wednesday), and the Government has received several requests from brokers to extend the submission deadline to allow them additional time to continue to work with their retail clients. Accordingly,the Expiration Date and the deadline for submission have been extended to 1PM on February 3, 2010.The expected settlement date for the transaction remains February 16, 2010.
In making the announcement, Hon Audley Shaw, Minister of Finance and the Public Service said "the success of the JDX is a critical component of Jamaica's economic programme and a prior action under the IMF Standby Arrangement that will clear the way for the full multilateral support package. This extraordinary external support, combined with the successful implementation of our reform programme, will set Jamaica on a path of sustainability and economic growth."
"The success of the JDX so far reflects our ability to come together as a community at this 'game changing' moment in Jamaica's history, and I wish to express the appreciation of the Government to the high level of participation already registered."
P.S. The above release was issued Wednesday by the Ministry of Finance and the Public Service, fulfilling the commitment made by the Minister, the Hon Audley Shaw, as he closed the debate on the economy in the House of Representatives on Tuesday (January 26).
Mr. Shaw told the House, Tuesday, "The Ministry is in the process of aggregating the response and expects to release a preliminary report tomorrow(Wednesday). The new date should be announced Wednesday, following the preliminary assessment of the response. The Ministry of Finance will then submit the preliminary report to the IMF for circulation to the board, in advance of the board meeting now set for next Wednesday." (JIS News)Source: JIS
Publish Date: Wednesday, January 27th
Stern says Gov't Committed to Research to Stimulate Growth
Minister of State in the Ministry of Industry, Investment and Commerce, Hon Michael Stern, says that the Government has remained committed to stimulating a culture of research to improve the nation's health, as well as its ability to generate investments and jobs.
Mr. Stern said that the practical use of science, technology and innovation would be crucial to the success of this policy.
"As Jamaica grapples with the challenges in the global market place, we are intensifying our efforts towards meaningful and sustained growth through research and development," he said.
The junior Minister was the main speaker at the Caribbean Young Scientists and Technologists Conference at the Sunset Jamaica Grande Resort in Ocho Rios St. Ann, January 20-22. It was hosted by the University of Technology (UTech).
Mr. Stern, speaking at the opening session on Wednesday (January 20), thanked UTech for hosting the conference, which sought to promote and increase the numbers of "young, brilliant, internationally competitive scientists."
"This Conference is an excellent initiative, which will foster cross-fertilisation of ideas, research, networking and healthy competition among our youth in the area of science and technology," he stated.
Mr. Stern said his Ministry encourages and supports innovation aimed at stimulating new demand-driven products. For example, he said that the Technology Investment Fund, which it has set up to support the commercialisation of technology-based products and services, is already yielding positive results.
He also noted that 80 percent of the projects benefitting from the Fund had been successfully commercialised, and include projects in telemedicine, ICT, bio-technology and flavour technology.
"Our ability to move products from research and development, through the various stages of the value chain will, in a very real way, determine our capacity to be more competitive in the world market," he noted.
He observed that the Ministry of Industry, Investment and Commerce and its agencies were key change agents in Jamaica's economic development, pointing to efforts of agencies such as the Scientific Research Council (SRC), Jamaica Intellectual Property Office (JIPO), the Bureau of Standards Jamaica (BSJ), Jamaica Business Development Corporation (JBDC) and Jamaica Trade and Invest (JTI), which provide vital elements needed to convert research and development into products, business, trade and, eventually, dollars and cents.
He urged the Caribbean region to continue to explore gaps, in terms of knowledge, and seek to share information that could generate empowerment.
He said that despite the limited resources, there is an urgent need to develop a common research strategy in areas that would seek to affect the region, including the effects of deforestation, climate change and environmental degradation.
"I want you to recognise that our development agenda, as a region, must focus on environmental sustainability, exploring the various uses of raw materials, food security, the potential of some of indigenous foods and spices and importantly, the opportunities that can be derived to increase the earning power of Micro, Small and Medium Enterprises (MSME) businesses through improved efficiency, quality and product diversity," he stated.
Source: KINGSTON (JIS)
Publish Date: Saturday, January 23, 2010
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