PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

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shrinking fiscal space due largely to unprogrammed expenditure as a result of unplanned events such as the May 2010 Security Operations in West Kingston 31 . (The smaller fiscal space restricts the ability of government to engage in growth inducing programmes.) loss of wealth associated with unregulated Financial Organisations (OLINT, Cash Plus). 3.4 The situation is further compounded by Jamaica’s economic structural deficiencies, which have slowed the pace of recovery efforts. Structural deficiencies identified in the Jamaican economy include: 1. High Debt to GDP ratio: This condition has the effect of: a. preventing the Government of Jamaica (GOJ) from running countercyclical policy to stimulate the economy during the recession b. reducing the GOJ discretionary expenditure (non-debt expenditure), which limits the government’s ability to spend on growth enhancing areas (education, infrastructure, security, etc) c. putting pressure on the supply of loanable funds, which crowds out private investment. 2. Concentrated Export Base: The Jamaican economy’s export base is highly concentrated, heavily dependent on the export of Bauxite & Alumina and Tourism. This has led to the Jamaican economy being highly susceptible to shocks. 3. Inadequate Labour quality: The quality of the Jamaican labour force 32 has also negatively affected Jamaica’s ability to reallocate workers to areas that are more economically viable, thus constraining the country’s ability to recover from the recession and move into higher productivity activities requiring skilled labour. In the 2010-11Global Competitiveness Report, Jamaica ranked 80 out of 139 in the category Higher Education & Training. Additionally, the country’s inadequately educated workforce was ranked as the fourth most problematic factor for doing business. 4. Mobility of Capital: The financial sector meltdown in the mid 1990s and the subsequent reform of financial regulations, together with the GOJ’s large appetite for debt financing, has led to a financial sector that is heavily dependent on government securities and is relatively risk averse when lending to the private sector 33 . The current recession environment (11 consecutive quarterly declines in GDP) has also led to: (i) increase in the stock of bad debts, resulting in 31 ECLAC estimates - $13 billion, while the Ministry of Industry and Investment estimates the fallout at $18 billion. 32 Approximately 67.7% of the employed labour force did not have “Basic CXC or above” qualifications in 2008. 33 Access to financing was ranked fourth most problematic factor for doing business in Jamaica in the Global Competitiveness Report. 85
Million $ Per cent Jun-10 Mar-10 Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 Jun-08 Mar-08 Dec-07 Sep-07 Jun-07 Mar-07 Dec-06 Sep-06 Jun-06 Mar-06 Dec-05 Sep-05 Jun-05 Mar-05 heightened risk aversion of financial institutions and (ii) uncertainty about future prospects, leading to consumers and firms postponing spending and investment decisions. 4.0 Socio-economic Trends under the Current Fiscal Consolidation Programme 4.1 Decrease in Real GDP: Jamaica has experienced 11 consecutive (year over year) quarterly declines, starting in the fourth quarter of 2007. Since bottoming out in the second quarter of 2009, the economy has been declining at a slower pace (see Figure 1). FIGURE 1: GDP GROWTH RATES 5.00 4.00 3.00 2.00 1.00 0.00 -1.00 -2.00 -3.00 -4.00 -5.00 4.2 Real value of private sector expenditure has been declining since 2007 (see Figure 2), highlighting the negative impact of the global economic crisis on the Jamaican economy. FIGURE 2: PRIVATE SECTOR EXPENDITURE IN CONSTANT 2003 PRICES 510000.0 500000.0 490000.0 480000.0 470000.0 460000.0 450000.0 2004 2005 2006 2007 2008 2009 86
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i A GROWTH-INDUCEMENT STRATEGY FOR
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To the many ordinary Jamaicans who
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Preface The Jamaican economy has ex
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for making a determined start on th
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the private sector groups, listed b
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Citibank N.A. Jamaica Branch Grace
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need for “additional fiscal space
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Chapter 2 ________________ Summary
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1.0 The Economic Situation Today 1.
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expected to provide an essential an
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Table 2.1. The Policy Framework: A
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programme of social inclusion that
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Strategic Focus Table 2.2. Growth S
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6.0 Short-Term Growth Stimulus 6.1
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decline of 2.0 - 2.2 percentage poi
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Table 2A.2. NWA Projects To be Fast
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Table 2A.5. Community Renewal Proje
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Table 2B.3. Impact of Repairing Far
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Appendix 2C Methodology of the Grow
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Part I _________ Overview 28
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2.0 Vision 2030 Jamaica Before delv
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3.0 May 2010 Security Event and Aft
Page 45 and 46: the longer than anticipated global
Page 47 and 48: April July October January April Ju
Page 49 and 50: Three industries recorded increases
Page 51 and 52: 9.0 Proposals for Growth-Stimulus I
Page 53 and 54: targeted economic and social infras
Page 55 and 56: partnering with government to disco
Page 57 and 58: 3.0 Growth Inducement Strategy The
Page 59 and 60: Growth-Inducement Strategy Alignmen
Page 61 and 62: 50 Part II _________ Situational An
Page 63 and 64: inadequate provision of public infr
Page 65 and 66: 2.0 Macroeconomic Assessment 2.1 In
Page 67 and 68: Increased global oil consumption wa
Page 69 and 70: $4,742.0 million and $688.4 million
Page 71 and 72: Non -Traditional Domestic Exports E
Page 73 and 74: negative impact of the Jamaica Debt
Page 75 and 76: ethanol and paint, whereas lower de
Page 77 and 78: Analysis of preliminary GCT data re
Page 79 and 80: The number of ship calls to the isl
Page 81 and 82: industry was, however, estimated to
Page 83 and 84: 4.0 Projected Performance 4.1 Calen
Page 85 and 86: increased marketing and extension s
Page 87 and 88: Electricity & Water For FY 2010/11,
Page 89 and 90: J$ Million Figure 5.1. Private Sect
Page 91 and 92: 2011/12). These extreme weather eve
Page 93 and 94: Chapter 6 ________________ Assessme
Page 95: creates allocative inefficiencies,
Page 99 and 100: Table 6.1. Employed Labour Force by
Page 101 and 102: J$ million Mar-10 Dec-09 Sep-09 Jun
Page 103 and 104: FIGURE 7: GROSS NATIONAL SAVINGS RA
Page 105 and 106: 4.10.2. However, the extent of the
Page 107 and 108: Part III ____________ Analytical Fr
Page 109 and 110: functional relationship between the
Page 111 and 112: It follows that: (5) s = I/Y = [S -
Page 113 and 114: However, the existence of measureme
Page 115 and 116: (d) v* = Y*/K* This is a measure of
Page 117 and 118: in Chapter 8. The mutual interactio
Page 119 and 120: Transforming the complex set of str
Page 121 and 122: Appendix 7A A Methodological Note T
Page 123 and 124: Chapter 8 ____________________ Asse
Page 125 and 126: The DBI focuses more narrowly on qu
Page 127 and 128: to ask, is it possible to predict g
Page 129 and 130: can be made to serve a very useful
Page 131 and 132: For further elaboration of the cons
Page 133 and 134: progressive Jamaica-based firms and
Page 135 and 136: Table 8.2. Jamaica: Doing Business,
Page 137 and 138: Table 8.4. Global Competitiveness I
Page 139 and 140: Table 8.5 (continued) Rank Indicato
Page 141 and 142: Rank* Constraint Table 8.7 Business
Page 143 and 144: Chapter 9 ___________________ Inter
Page 145 and 146: 3.0 The Burdens of LAC’s Logistic
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conditions. These combined with a p
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Figure 9.4. Proportion of Primary A
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6.0 Logistics are Essential for Tou
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7.0 Fundamental Steps Forward for J
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Part IV ________________ Policies a
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Current Status: Cabinet by decision
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e more than compensated for by the
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B ____________________ Eliminating
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Commercial Bank loan rates have als
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5.0 Expected Outcomes These measure
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capital, mainly in the form of equi
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oth local and overseas (including t
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Table C.1. Proposed Implementation
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Locally, the Scientific Research Co
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Develop formal and informal links t
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D ____________________ Business Pro
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5.0 Recommendations Based on the ma
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2.5 Coexistent with the levels of u
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industry as well as provide funding
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Table E.2. Unemployed Labour Force
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indirect losses experienced when th
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Table F.1 (continued) Area Type of
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G ____________________ Community Re
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Figure G.1 Community Renewal Progra
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Table G.1 Priority Initiatives Obje
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Table G.2 Phased Implementation Pla
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H ____________________ Proposed Wes
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3.0 Transparency Guarantees By desi
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and Coordinating Unit (PCMU) was es
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therefore need to have sanctioned o
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Figure I.1. Functions of National P
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The rationalisation was guided by t
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deliver services in an efficient an
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efurbishing to allow for accommodat
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Part V _______________ Panelists’
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With the benefit of hindsight, some
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ight. Where we as a society fail is
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and exclusion of the majority of th
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the elders, youth, children. What f
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C __________________ Enhancing Nati
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Figure C.1. National resilience is
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