Transcript Developing Jamaica Beyond 2017

DEVELOPING JAMAICA BEYOND 2017
October 13, 2016
Department of Economics
UWI, MONA
PUBLIC SEMINAR SERIES
CHALLENGES
CONTEXT
PROGRESS ON THE MICRO-FOUNDATIONS OF GROWTH SUPPORTED BY IDPs
a.
b.
c.
d.
e.
Foundations of fiscal discipline – legislation and programmatic
Macroeconomic stability – Low inflation, exchange rate management
Taxation Reform – Policy & Administration
Debt Management Reform – Liquidity management, containing government demand for funds
Financial Sector Reforms – Prudential framework, Bank supervision, Credit Bureaus
WEAK EXTERNAL DEMAND CONTINUES (WEO)
MULTIPLE SOURCES OF RISKS (WEF)
EXTERNAL CONDITIONS
1. Global growth prospects - Uncertain:
i.
ii.
iii.
BREXIT – downside risk
Potential for rising Oil Prices – contracting excess supplies
Need for structural reforms given weak growth environment and eroding policy buffers
2. Continued advance of the impact of Climate Change – Vulnerability of SIDS
3. Uncertainty of outcome of US election and implications for US foreign policy
LOCAL CONTEXT
SOCIAL
INFRASTRUCTURE
ECONOMIC
REPUTATIONAL
VULNERABILITIES
LOCAL CONTEXT
1. Social:
a.
b.
c.
Violent Crime
Poverty
Aging population
2. Infrastructure Deficiencies
a.
b.
Road network
Transportation networks
3. Reputational Issues
a.
b.
Lottery Scamming
Proceeds of Crime/Correspondent Banking
LOCAL CONTEXT
4. Economic Structures:
a.
b.
c.
d.
e.
f.
Informality
Private Sector underdevelopment
Public Sector processes and inefficiencies
Labour Market challenges for innovation and sophistication
Low Productivity & Concentration of economic structure
Continued high debt
5. Vulnerabilities
a.
b.
c.
d.
e.
Climate Change – Health, Water availability
Exposure to human and natural hazards
Incomplete Reform & Fatigue
Decision-making & implementation inertia
Intergenerational Issues
REMAINING WRINKLES:
SHORT & LONG TERM
Vision 2030
Jamaica
From a mix of a
vicious and virtuous
cycle to one that is
more virtuous
Sustainable
Economic
Growth
Addressing Local
Conditions
PROSPECTS
2017 & BEYOND
LYNCHPINS
Private
Sector
Drivers
Public
Sector
Relevance
Empowered
Citizens
UPSIDE
1. Opportunities in the creative and sport industries & agriculture and agroprocessing
2. Higher value-added BPO opportunities and construction linkages
3. Locally available maritime training for logistics
4. Creditable performance in policy-based areas beyond traditional economic areas
5. Recent increase in the proportion of the labour force actively looking for work
6. Potential benefits for Jamaican exports to UK as they face a potentially lower
tariff structure
7. Continued recovery from global economic crisis
UPSIDE
8. Continued reduction in crowding-out of private sector
9. Programme, policy and legislative support for sustained debt reduction
NON-CONCESSIONAL OPTIONS - IMF
Standby
Agreement
(SBA)
Extended Fund Facility (EFF)
Flexible Credit Line
(FCL)
Precautionary & Liquidity Line (PLL)
Rapid Financing Instrument
(RFI)
Purpose
Short term BOP
problems
This facility helps countries address
medium- and longer-term balance of
payments problems reflecting extensive
distortions that require fundamental
economic reforms.
Very strong
fundamentals, policies,
and policy
implementation
Sound fundamentals and policies, and a track record of implementing
such policies.
PLL-qualifying countries may face moderate vulnerabilities and may
not meet the FCL qualification standards, but they do not require the
substantial policy adjustments normally associated with SBAs.
Rapid financial assistance with
limited conditionality to all
members facing an urgent
balance of payments need
Borrowing
Amount
No preset cap
No preset cap
No preset cap
6 month: 125% of Quota in normal times
Annual limit of 37.5 percent of
quota and a cumulative limit of
75 percent of quota
1 to 2 years: 250% of Quota in extraordinary times, cumulative cap
of 500%
Country Duty
Conditionalities
Adequate assurances about the
member’s ability and willingness to
implement deep and sustained
structural reforms
NONE
Conditions aimed at addressing country vulnerabilities
Timeframe
12 – 24 months
25 – 36 months (4 years theoretically
possible)
1 or 2 years
6 months OR
1 to 2 years (Semi-annual reviews)
Repayment
3 ¼ - 5 years
4 ½ - 10 years
Same as SBA
3 ¼ - 5 years
Precautionary
Options
Possible
n/a
Can be drawn down up
front or held as
precautionary
Can be drawn down up front or held as precautionary
Phasing &
Frontloading
Possible
Possible
Can be frontloaded
N/a
NON-CONCESSIONAL OPTIONS - IMF
FLEXIBLE CREDIT LINE (FCL)
Purpose
Very strong fundamentals, policies, and policy
implementation
Borrowing Amount
No preset cap
Country Duty
NONE
Timeframe
1 or 2 years
Repayment
Same as SBA
Precautionary Options
Can be drawn down up front or held as precautionary
Phasing & Frontloading
Can be frontloaded
PRIORITIES
SELECTED PRIORITIES
Private
Investment
Bottlenecks
Improved
linkages to
mega projects
Special Projects
PPPs
Public
Sector
Reform and
Transformation
Agenda
Preliminary
project work
Improved
educational
outcomes
Transformed
health and
social welfare
Financial
Sector
Continued
strengthening
Correspondent
issues
Inclusive
Financial
System
Macro
Continued
Fiscal Discipline
Debt
management
Inflation
management
Inclusive
Growth