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Strategies for Stimulating Growth and Sustainability John W. Robinson Deputy Governor Bank of Jamaica. 4th BIENNIAL INTERNATIONAL CONFERENCE ON BUSINESS, BANKING AND FINANCE ‘Restoring Business Confidence & Investments in the Caribbean’ 22 – 24 June 2011 Trinidad & Tobago.

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Strategies for Stimulating Growth and SustainabilityJohn W. RobinsonDeputy GovernorBank of Jamaica


‘Restoring Business Confidence & Investments in the Caribbean’

22 – 24 June 2011

Trinidad & Tobago


  • Sustained Economic Growth

  • Role of Government

  • Strategies for Stimulating Growth in Jamaica

    • Economic Transformation Programme

      • Progress to date

  • Concluding Remarks

Sustained economic growth
Sustained Economic Growth

  • A steady increase in the productive capacity of the economy.

  • In the medium to long run, production possibilities are enhanced by improvements in technology, the quantum and quality of the labour force as well as the capital stock.

  • Fundamental considerations

    • Issues of the quality of education and the cost of capital

    • Adequacy of supporting infrastructure

    • Environmental sustainability

    • Social and economic stability

Role of the government
Role of the Government

  • Provide an enabling environment for private sector led growth

    -macroeconomic, social and political stability,

    - sound physical infrastructure

    - secure property rights

    - stable financial system

    - well-trained labour force

    - competitive markets

    - efficient public sector

    - environmental sustainability

Strategies for stimulating growth in jamaica
Strategies for Stimulating Growth in Jamaica

  • Jamaican economy grew by 0.8 per cent over the last decade.

    • Despite relatively high rates of investment.

  • Weak growth performance attributed to low productivity.

    • Reflecting the influence of macro / microeconomic and social factors.

  • Relatively unstable macro environment

    • Embedded in elevated public debt levels

    • Adverse debt dynamics

    • Relatively high rates of inflation

  • Resulted in distortion of private investments

    • Difficult to project production costs, cash flows and rates of returns.

    • High interest rates environment

  • As such, long-term investment decisions were either postponed or shelved, while some new ventures folded.

  • Main elements of current economic strategy
    Main Elements of Current Economic Strategy

    • The main areas of focus of the transformation programme are:

      • Restoring fiscal discipline and debt sustainability

      • Enhancing financial system stability

      • Improving the business environment

    Fiscal discipline debt sustainability
    Fiscal Discipline & Debt sustainability

    • Primary objective

      • Elimination of the fiscal deficit over the next four years

      • Institutionalization of prudent fiscal practices

    • Strategies

      • Voluntary par-for-par exchange of domestic bonds for longer dated, lower coupon instruments (JDX)

      • Establishment of a fiscal responsibility framework

      • Implementation of a centralized treasury management system

      • Public sector reform

      • Divestment of non-core assets

    Financial system stability
    Financial System Stability

    • Primary objective - reduce systemic risk

    • Strategies

      • Amendment of BOJ Act to give the Bank responsibility for overall financial system stability

      • Development of an Omnibus Banking Law

      • Strengthening prudential framework of securities dealers,

      • Combating unregulated financial schemes

      • Improving the regulatory framework for collective investment schemes

    Enhancing the business environment
    Enhancing the Business Environment

    • Primary objective – Enabling business environment

      • Comprehensive transformation of the tax system

        • To reduce distortions & inefficiencies & stimulate growth

    • Strategies

      • Simplify the tax system, widen the base and improve equity mainly through the streamlining of waivers and exemptions.

      • Elimination of stamp duties on financial transactions & transfer tax and stamp duties on registered corporate securities.

    Supporting infrastructure
    Supporting Infrastructure

    • Achieving sustainable economic growth also require adequate supporting infrastructure, physical and social.

      • Physical

        • Investments through the Jamaica Development Infrastructure Programme (JDIP)

      • Social

        • Special emphasis placed on early childhood development

        • Training for the out of school population

        • Improving teacher quality

        • Restoration of law and order

    Progress to date
    Progress to Date

    • Fiscal Discipline & Debt Sustainability

      • Successful implementation of JDX in February 2010.

      • All quantitative targets under the IMF-SBA programme have been met.

      • Divestment of Air Jamaica and Sugar Company of Jamaica Holdings.

      • Fiscal responsibility framework passed in Parliament.

      • Pilot CTMS .

      • Public sector transformation plan tabled in Parliament.

    • Financial System Stability

      • Amendments to the Bank of Jamaica Act have been drafted.

      • Phased introduction of risk weights for foreign currency denominated GOJ securities (started June 2010).

      • Draft Omnibus Banking Law is being prepared.

    Progress to date cont
    Progress to Date (Cont)

    • Enhancing the Business Environment

      • Stable Macroeconomic Environment

        • Trend decline in inflation & interest rates

        • Improving business confidence

      • Single tax authority established

      • Streamlining of customs procedures

      • First phase of the reforms implemented in the FY2011/12 budget

        • Elimination of stamp duties on financial transactions.

        • Abolition of transfer tax and stamp duties on registered corporate securities.


    • The major challenge for policy makers is the restoration of sustained economic growth.

    • The recent global crisis exposed a number of underlying weaknesses in the Jamaican economy, to which the Government responded with a raft of far-reaching economic reforms.

    • The macroeconomic programme is being complemented by initiatives to enhance social capital.


    • Jamaica has made notable progress in its economic programme

      • very stable macroeconomic environment

      • improving business confidence.

      • indicators suggest that Jamaica should emerge from the recession in the first quarter of 2011

  • However, transitioning from recovery to sustained high growth rates will require a long-term commitment by the society to the process of economic reforms and social transformation that have begun.

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