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ContentsMessage From the editor- page 3

News Chairman’s Club Forum – The Role of the Opposition Party- page 6

More Than 200 Receive Jobs Through st James/eU Banana Project- page 7

COveR sTORyPsOJ supports the new IMF agreement- page 8

MeMBeR FOCUs Insurance association of Jamaica:serious about social Responsibility- page 10

Make ‘space’ for Janelle Pantry- page 11

yUTe IN FOCUs Jahbookie green- page 12

O’brien scott- page 13

haPPeNINgs Record-setting sigma Run 2013- page 14

Mentorship of emerging entrepreneurial Leaders Dinner with Michael Lee Chin- page 15

News FROM The CeO’s RePORT- page 16

Message from the

Editor

The need for an IMF agreement has been on just about every Jamaican’s lips since the middle of last year. Here at the PSOJ, we have spoken at length - in this publication and elsewhere in the national media - about the importance of signing a new deal. We can rest a little easier now that the government of Jamaica has secured a US$750 million staff-level agreement and is now awaiting the IMF board’s approval of the recently announced National Debt Exchange (NDX) that should enable us to secure a Standby Agreement.

We have compiled a special analysis of the proposed new deal, where we examine all the measures that must be taken if Jamaica is to

truly benefit from this arrangement. There will be significant challenges arising from this deal, as we can already see, but we must be prepared to make the necessary sacrifices so that Jamaica can work its way into a position of economic growth.

This new agreement will require all stakeholders - government, opposition, private sector, civil society and ordinary Jamaicans to work together. The PSOJ has publicly offered its support for the deal and will do our part to ensure that the country reaps the benefits of its relationship with the IMF. We call on the rest of Jamaica to stand with us.

Sandra AC GlasgowCEO, The Private Sector Organisation of Jamaica (PSOJ)

4

WWhat comes to mind when you hear the term ‘opposition party?’ For many Jamaicans, the term simply refers to the party not in power, whose purpose is to stand against the government’s every action. The true role of the opposition party was the topic of discussion at the first PSOJ Chairman’s Club Forum of 2013, held on January 29 at the Wyndham Kingston Hotel. While the subject of the pending IMF agreement was on everybody’s minds, it was broached only as part of an examination of the role of the opposition in Parliament.

In his opening address, PSOJ President Christopher Zacca gave a brief synopsis of the opposition’s purpose: “Yes, the accepted role of the opposition party is to oppose the government by criticising policies and practices. They are expected to highlight and expose those aspects of the government’s policies and performance that they believe to not be in the national interest.”

Zacca pointed out that one of the vital functions of an effective opposition is to protect the society from corruption and misuse of power. “In carrying out this duty, the opposition should challenge every abuse of executive power, bureaucracy, issues of breaches of human rights; corruption and waste of public funds, etc and expose all these for public or parliamentary criticism and control. This is essentially a watchdog role and is necessary in order to check executive excesses and stimulate democratic debate,” he explained.

“The opposition also has the responsibility to give attention to the continuous development of its policies that are relevant to the day-to-day lives of the economy and the people, and to keep these in view before parliament and the wider public,” Zacca added. “It is the duty of the opposition to make known in parliament the feelings of those sectors of society whose views may otherwise be ignored or unknown to the government.”

Chairman’s Club Forum

The Role of the OppositionParty

NEWS

5

Naturally, the guest speaker was current Opposition Leader, the Honourable Andrew Holness. During his presentation, Holness spoke at length about defining a ‘new’ opposition, noting that the role of the party is “constantly changing” in modern democracies, such as Jamaica: “The days of oppose, oppose, oppose are gone and I recognise that.”

However, he acknowledged that the party in opposition often finds itself in a bit of a conundrum, being criticised for either not talking enough or talking too much and not taking any action. Describing himself as “a politician of a different breed and era,” Holness pointed out that the Jamaican Labour Party has been a “very responsible and progressive opposition.” He singled out examples of when the JLP had put the national interest above politicking, such as its support for tax reform, which it had warned the government must be done with social protection first and its support of the public sector wage freeze.

Of course, since these examples relate directly to the pending IMF deal, Holness gave his party’s perspective on the IMF and the necessity for an agreement to be reached. He highlighted some of the steps the JLP had taken while in office to help the Jamaican economy weather the recession without collapsing, which involved turning to the IMF for a standby agreement. These moves included selling Air Jamaica, implementing a debt exchange programme (JDX)

that was lauded by US-based publication Time magazine and starting the discussion on tax reform. For each of these steps, Holness noted that the JLP paid a political price and questioned the current PNP government’s leadership one year after assuming office.

“The problems that faced the country then are the same problems that face the country now. I want you to understand that they are not JLP problems, they are not PNP problems. The clock does not start over because there is a change of government. The clock continues to tick and tick and tick and governments must understand that the longer you wait in trying to get what you consider the best deal, the worse the problem becomes and then the worse the implementation of reforms become,” he expounded. “I think that the government has wasted precious time. Had we won we would not have said, ‘the old agreement is dead.’ We would have worked assiduously to put in place some of the low hanging fruits that could easily be done. Tax reform was one of them.”

Holness also pointed to other countries that faced similar economic straits as Jamaica – the Seychelles, Mauritius, Estonia, Iceland, Ireland, Panama and Costa Rica, but have ‘taken the bitter medicine’ and are now better off for it.

“So the problem is not a policy problem. It’s not a problem that we don’t know what to do – we know what to do. There’s no real policy difference between the political parties. What we have is a political problem… What we have is an implementation gap. What we have is a leadership problem,” he stated.

He summarised: “We need a government that will provide leadership. We need a government that will speak the truth and tell the truth. We need a government that will include you in the decision-making process that will give you information about what is happening so that you don’t feel so uncertain about the future.”

(l-R): PSOJ President Christopher Zacca, Opposition Leader, the Hon Andrew Holness and Edward Gabbidon, Vice President, Corporate & Business Sales at LIME

“So the problem is not a policy problem. It’s not a problem that we don’t know what to do – we know what to do. There’s no real policy difference between the political parties. What we have is a politi-cal problem… What we have is an implementation gap. What we have is a leadership problem.”

6

IIn September 2011, the PSOJ, in association with the Community Training for Empowerment Programme, the Tangle River Community Development Committee and Global Gateway Solutions (GGS) Inc, obtained funding from the European Union to implement the St James Youth Training and Job Placement Project.

The main objective of the project was to train and certify 200 people, mainly women, between the ages of 18 and 30, from communities in South St James for employment in the IT Communications sector. Maroon Town, Cambridge and Anchovy were the main communities targeted, as well as other towns in

the wider St James area. Many of these communities were formerly banana-growing regions and are now experiencing high rates of youth unemployment due to the decline of traditional agricultural industries.

Participants had to have at least three CXC subjects, including English, and live in St James. Those who required basic skills training received were certified through the HEART Trust/NTA, while those who already possessed basic ICT and employability skills were selected for direct placement in the two-month internship programme offered by GGS.

The project officially ends in March.

More than 200 Receive

JobsThrough

St James/EU Banana

ProjectThe participants who successfully completed the internship programme obtained permanent employment at GGS. Approximately 153 people received HEART training between February 2012 and February 2013, while a total of 272 have been hired by Global Gateway Solutions.

7

MMany current and aspiring entrepreneurs, particularly those in the small and medium-sized enterprise (SME) sector, often face the challenge of generating capital to start or help sustain their businesses. Oftentimes, they don’t have the necessary collateral to secure bank loans and, with no established venture capitalist network in the country, they are forced to give up or delay their dreams of business ownership. However, this will soon be a thing of the past as the Development Bank of Jamaica (DBJ) recently announced plans to establish two venture capital funds by 2016.

The Jamaica Venture Capital Programme (JVCP) will remove the barriers currently faced by investors wanting to pool their funds to finance SMEs. The project has received the backing of the Inter-American Development Bank (IDB), which has, through its Multilateral Investment Fund, entered into a Non-reimbursable Technical Cooperation Agreement to put up US$150,000 ($14 million) to match the DBJ’s US$128,000.

Through this grant, the DBJ will undertake the development of a strategic plan and various awareness-raising activities for the design and roll-out of the local VC ecosystem. 

“The strategic plan will highlight the gaps in the ecosystem which make the environment unfavourable to the development of venture capital and private equity in Jamaica,” said Audrey Richards, the consultant hand-picked to oversee the establishment of the funds. “These include and are not limited to lack of fund management expertise, need for capacity building of SMEs and the need

to undertake amendments to the legislative and regulatory framework.”   

Over the next two years, the DBJ will undertake various activities aimed at closing these gaps. “These activities are being undertaken by the DBJ with the full engagement of private sector stakeholders as well as other public sector stakeholders, such as the Financial Services Commission,” said Richards.

“These venture funds, we expect, will be launched by private sector fund managers, with the full support and where possible, technical assistance from the DBJ. Should the DBJ also look to provide funding to the industry, it would seek to do so as a co-investor in these private sector funds.” 

According to Richards, this private sector focus is because “the feedback from research is that  direct  financing by public sector entities in SMEs generally has not been successful. This is mainly attributed to the motivation and actions of the public sector financier being at odds with normal investment drivers.” 

The JVCP, which received government approval last September, has already received a favourable response from the local business community. “A number of SMEs and entrepreneurs have made queries regarding access to funding,” said Richards.  “We have advised them of the objectives of this phase of the JVCP and the work the DBJ will be undertaking to development the environment and to encourage private sector fund managers in the eventual development of VC funds.”

DBJ venture capital

fundsset for

“The strategic plan will highlight the gaps in

the ecosystem which make the environment

unfavourable to the development of venture

capital and private equity in Jamaica.”

2016

currENt iSSuES

$

$

$

$

$ $

$

$$PSOJ

Supports the New

IMF Agreement

covEr Story

9

On February 11, Prime Minister, the Hon Portia Simpson Miller and Finance Minister, the Hon Peter Phillips took to the airwaves in a joint address to the nation, where they outlined a series of measures to be taken by the government in the pursuit of an extended fund facility from the International Monetary Fund (IMF). Additionally, an Oversight Committee has been established to ensure all branches of the public sector fall in line with the programme, which is necessary for the government to secure a new arrangement with the IMF.

The Private Sector Organisation of Jamaica (PSOJ) commends the government on its plans to ensure accountability and transparency through the establishment of the oversight committee. The membership of the committee, which is expected to comprise both public and private sector stakeholders, reflects the now common understanding that sustainable, successful growth and development can only be achieved through the alliance and cooperation between the public and private sectors.

The PSOJ also supports the National Debt Exchange Programme, but in order to ensure that this is the last such programme, it is insisting that the government must perform its obligations and live up to its commitments to fiscal discipline and consolidation going forward.

“Fulfilling this and the other outlined prior conditions will be painful for all of us, but it requires a truly national effort, and we must all share the burden if we are desirous of securing an IMF deal. PSOJ members also want to see the immediate introduction and implementation of a growth plan for Jamaica, post IMF deal. The fact is, that any programme of fiscal consolidation will fail to reduce our debt to sustainable levels unless it is accompanied very quickly by economic growth,” said PSOJ President, Christopher Zacca.

The organisation is calling on all social partners to heed the Prime Minister’s plea for us to pull together in the efforts to rescue the country from debt and embark on a long-term path to sustainable growth, and is pledging to do its part to help pull the country out of its current economic abyss.

Shortly after these measures were made public, it was announced that both parties had reached a staff-level agreement, wherein the IMF is to present  Jamaica’s economic programme to its executive board for consideration by March.

Turn to News from the CEO’s Report (page 16) for a more detailed look at the PSOJ’s position.

Fulfilling this and the other outlined prior conditions will be painful for all of us, but it requires a truly national effort and we must all share the burden if we are desirous of securing an IMF deal.

OThe announcement of a second National Debt Exchange offer (dubbed by many as JDX2), which was launched on Tuesday February 12

A range of new measures related to general consumption tax (GCT) that will come into effect on March 1

An increase in the stamp duty rates and transfer tax

The application of a Customs Administration Fee (CAF) on all imports (except for charitable organisations and the bauxite sector, to be implemented on April 1

A $45 billion drawdown from the National Housing Trust (NHT) over the next four years ($11 billion per year)

Among the measures outlined as part of this economic reform

programme were:

10 MeMber focus

The Insurance Association of Jamaica (IAJ) has been a proud member of the PSOJ for several years and, during this time, the relationship has been beneficial. The major benefit, according to Executive Director, Orville Johnson, has been the exposure the association receives from being a part of an organisation with such deep roots in Jamaica’s larger business community.

The IAJ was created to protect the interests of the insurance companies that make up its membership. Currently, the association is made up of 16 insurance companies, 10 for general insurance and six for life insurance. With so many companies, there is wide scope for corporate social responsibility and each company has its own programme. However, as an umbrella organisation, developing collective projects is also a priority.

For instance, the organisation conducts public education seminars on a variety of topics relating to general and life insurance. Not surprisingly, one major area of interest is the promotion of road safety. The IAJ works alongside Grennell’s Driving School, The Road Safety Unit of the Ministry of Works and the Jamaica Automobile Association on various projects, including the development of a database that will be able to provide information on whether or not vehicles have been properly insured and licensed.

Another focus is advocating the importance of planning for retirement, contributing significantly to the creation of the Pension Act, according to IAJ President, Hugh Reid. He is also a member of the PSOJ Council, which is the policy-making arm of the organisation.

The IAJ also gives back to the younger members of society, organising an annual treat at the Charles Chin Loy Early Childhood Centre in West Kingston, as well as providing educational materials for the charges. This fits in well with the association’s interest in mathematics, which sees it supporting several initiatives built around the subject. “We have been involved in math competitions for schools over the years as we seek to develop proficiency in this subject area,” said Johnson. To this end, the organisation currently works along with the Mathematics Department of The University of the West Indies in staging the Vivian Rochester Memorial Mathematics Junior Olympiad.

With all these contributions, being a part of the PSOJ enables the IAJ to reach a wider range of people in various sectors, all of whom can benefit from the services provided by its members. It also serves a greater purpose, as Reid noted, “we were interested in participating in as many bodies as possible which seek to influence the role of government.”

T

Insurance Association of Jamaica:

Serious about social

responsibilityIAJ Executive Director Orville Johnson

mEmbEr focuS

11

Spaces Limited has carved a niche for itself in the local home décor and furniture retail sector, offering unique items that help customers truly make their homes their castles. The company is only five years old, but in this short time, founder and managing director Janelle Pantry has been able to expand and is well on her way to making Spaces a household name.

Spaces is quite a departure from Pantry’s original plans to be in the tourism sector. After spending some time in Austria to study German, she became enamoured with the modern and simplistic styles of furniture, décor and lifestyle she saw in the country and “thought that it would be a great idea to update the home décor industry in Jamaica.” Having done her research, Pantry returned home to pursue this new venture.

The company opened in November 2007, selling home accent pieces and accessories and by 2009, it had expanded into designing and selling furniture, as well as providing interior decorating consultancy services. With the on-going success and continual expansion, by November 2011, Spaces relocated from the Winchester Business Centre to its new home at 9-11 Phoenix Avenue. Pantry considers the continued growth one of the company’s significant accomplishments over the years. “This accomplishment can be attributed to the fact that I’ve been able to respond quickly to the changing needs and demands of my clients. Add to that, emphasis is always placed on customer service and having good customer relations,” she declared.

Although the company only joined the PSOJ last year, Pantry already sees where the relationship with the organisation will be a mutually beneficial one. “I wanted to be a part of an association that I would be able to contribute directly to, achieving changes that will make Jamaica a better place. Added to that, the PSOJ believes in enhancing the professionalism of its members through its various training programmes,” she said.

Going forward, Spaces has plans to further expand and incorporate locally manufactured materials into its products. “With the recent devaluation of the Jamaican dollar, increased taxation on the importation of goods and a greater demand for locally made products, we are actively looking to expand that aspect of the business,” said Pantry. “In the short term, we are actively seeking to market and retail locally-produced items in order to reduce our reliance on the US dollar.”

SMake‘Space’

forJanelle Pantry

(L-R): Janelle Pantry with her staff members inside the Spaces showroom

12

EEighteen-year-old Jahbookie Green graduated from Tivoli Gardens High School in 2011 with only a pass in Mathematics – one of the two Caribbean Secondary Education Certificate (CSEC) examinations he sat. A year later, Green was still home with no prospective of going back to school or getting a job, when he was introduced to the Youth Upliftment Through Employment (YUTE) programme through his Community Centre in Denham Town. Last November, he said he grabbed the opportunity to enhance himself rather than choosing the other alternative – “badness,” which he was not prepared to be a part of. “Instead of sitting at home doing nothing or get involved in the wrong company, I applied to go in the YUTE programme, which I don’t regret,” he said.

Currently, Green is enrolled in the Entrepreneurship arm of the programme, which gives participants the opportunity to develop skills needed to start or develop their own business. He attends classes for Math and English, his entrepreneurship course and Electrical Installation (his area of specialisation) at the Caribbean Maritime Institute.

Green’s interest in electrical wiring was sparked in a somewhat unconventional way: “When the persons from JPS (Jamaica Public Service Company) would come in and tear down the wires, the people in the community would put them up back. I used to watch how them put the wires together and get electricity,” he explained. Ironically, he is now looking forward to working with the JPS upon completion of his course. “I also want to open my own supermarket in the future. My parents run a shop, but I want to do bigger than that,” he said.

The youngest of five children, Green said he is determined to successfully complete the YUTE programme and make his family proud. He is also a source of inspiration for some of his friends, one of whom, Kervin Smith, has also successfully joined the YUTE movement. Smith is also enrolled in the Entrepreneurship programme, specialising in Marketing and Sales.

He shared, “Jahbookie told me about the programme and the certification at the end and it came across as a good idea, so I joined and I’m now enjoying myself.”

Green has lauded the work of the YUTE programme coordinators for giving young people like himself a chance to uplift themselves, despite negative influences within their environment. He stated, “This programme keeps me off the street and out of danger. I have friends involved in gangs, so I could have been a part of gang violence or even caught up in smoking, but I choose to do something positive and learn new skills.”

Jahbookie Green: “YUTE Keeps Me Away from ‘Badness’ ”

y.u.t.E iN focuS

13

AAs she lay on her deathbed, O’Brien Scott’s mother pleaded with her son to make something of himself. Since then, this remarkable young man, a product of the inner-city community of Arnett Gardens, has worked hard to overcome harsh living conditions to rise above the circumstances of his birth. This he has done with one goal in mind – making his mother proud.

Scott was reminiscent of the days when his mother was the sole breadwinner. Although they didn’t have much, she always ensured that he had what he needed. “In terms of lunch money, I would get like $50 and it couldn’t do much, but I was sure of my dinner when I got home,” he said.

Life after his mother’s death was even harder as the teen was forced into living with his father, who had six other children. He remembered how he got involved in the Youth Upliftment Through Employment (YUTE) Programme and is grateful for the impact it has had on his

life: “I saw a girl going over by a school in Jones Town one day and I asked her what was going on and she told me about YUTE. I went over to the school the next day and a teacher named Narda Bailey told me I could start the next day.”

With no money or means of getting school supplies, Scott returned the next day and started classes. Today, he is a student at the Caribbean Maritime Institute (CMI) and although he has not yet been assigned a mentor, he gave credit to Latoya Laing and Kirk Rhoden who have supported him emotionally and financially. He has made himself a force to be reckoned with academically, taking part in the school’s debating competition, where his team placed first and second in different categories and he narrowly missed out on the coveted prize of best speaker. Because of the values instilled by both YUTE and the CMI, Scott was not satisfied with his performance. “I was distraught because I knew I could have done better,” he admitted.

Scott also shared that his dream of entering the army is now within his grasp because of the training he has received through YUTE and the CMI. The values instilled by his mother have also helped Scott to stay grounded despite the challenges he has faced. “My mother always told me not to drink or smoke and always be myself, so when I’m being pressured, I’m reminded of this,” he said.

Scott had this message for other young people who might be facing situations similar to his: “Instead of saying there’s nothing out there, stop wasting time and get up and look. Be determined and keep focused, because there are things out there, just go get it.”

Working Hard to

Make His Mother

Proud

O’Brien Scott:

“Instead of saying there’s nothing out there, stop wasting time and get up and look. Be determined and keep focused,

because there are things out there, just go get it.”

14 happENiNgS

TThe 15th annual Sagicor Sigma Corporate Run, held on February 17, was an event for records. With 20,534 runners, walkers and wheelchair athletes registered, this was the largest ever staging of the charity event and, to top it off, the winner of the men’s open run, Shawn Pitter, crossed the finish line in a record 16 minutes and 59 seconds. The theme for this year’s staging was ‘Healthy Spaces, Smiling Faces’ and the smiles were made even brighter when MC Jennifer ‘Jenny Jenny’ Small later announced that Sagicor had surpassed its $16 million dollar target, raising $16.026 million. The funds will be donated to Bustamante Hospital for Children, Jamaica National Children’s Home and the Best Care Lodge.

Early in the morning, the eager participants gathered at Emancipation Park for an energetic warm-up session, following which they made their way to the starting line on Knutsford Boulevard for the 7:30 kick-off.

Men’s Open Run• Shawn Pitter – 16.59 minutes• Rupert Green – 17.29 minutes• Kemar Leslie – 17.51 minutes

Women’s Open Run• Elisabeth Mondon – 20.9 minutes • Danielle James – 20.21 minutes• Arieta Martin – 21.19 minutes

Open Walk• Rohan Gordon (Male)• Nyasha Heaven (Female)

Wheelchair• Sheldon Cox (Male)• Sylvia Grant (Female)

Under-16 • Garfield Gordon (Male)• Cheser Adams (Female)

Corporate Run• Wilfred Wilson – Urban Development Corporation (Male) • Carey Ann Williams – Bank of Jamaica (Female)• Executive Run Award – Wilfred Morrison, Companies Office of Jamaica • Largest corporate team – Jamaica Biscuit Company• Top male team – J Wray & Nephew• Top female run team – Bank of Jamaica

Record-setting

Sigma Run2013

Sagicor surpassed its $16 million dollar target, raising $16.026 million.

15

The final Mentorship Dinner for 2012 was held on Wednesday, December 12 at the Courtleigh Hotel. The guest mentor was the Honourable Michael Lee Chin, OJ, Executive Chairman of AIC and National Commercial Bank Jamaica Ltd.

Lee Chin, a man with a wealth of business experience and tangible achievements, provided mentees with a most interesting and riveting mentorship experience.

Mentorship of Emerging

Entrepreneurial Leaders Dinner

with Michael Lee Chin

T

16 NEWS from thE cEo’S rEport

GOJ/IMF PROPOSE NEW ARRANGEMENTSome of the main features and parameters of a proposed new Government of Jamaica/International Monetary Fund (IMF) agreement were outlined by Minister of Finance, Dr Peter Phillips, on Monday, February 11 during a joint broadcast with Prime Minister Portia Simpson-Miller. Firstly, the new arrangement will be a multi-year Extended Fund Facility (EFF) rather than a Standby Arrangement (SBA). Jamaica previously had a 27-month SBA under the previous JLP administration. An SBA is generally shorter in duration – usually about 24 months, with repayment periods of 3.25–5 years. An EFF, on the other hand, typically runs for three years and, in exceptional cases, four years, with repayment periods of 4.5-10 years. EFFs are generally offered to countries experiencing serious longer-term payment imbalances requiring structural adjustments that might take a longer time to implement and bear fruit. Given the deep-rooted structural weaknesses of Jamaica’s economy over several decades, an EFF appears to be both logical and necessary.  REDuCING DEBT-TO-GDP TO 95 PER CENTJamaica’s total domestic and external debt currently stands at $1.7 trillion, relative to GDP of $1.2 trillion. Reducing the country’s debt to GDP to 95 per cent by 2020 implies cutting about $550 billion from the national debt over the seven year period (an average $80 billion annually) or, correspondingly, growing the economy by that amount five per cent nominally, or some combination of both. Debt-to-GDP is calculated using the nominal, not real value of GDP. Thus, even if real growth remains flat, if borrowing is kept below the level of inflation or below the nominal growth rate, then the debt-to-GDP ratio will fall. The problem Jamaica has experienced over the years before 2011 is that the rate of growth of debt (on average 13 per cent) has, in several years, been double the rate of inflation and more than double the nominal growth rate. Considering that we have been ‘borrowing from Peter to pay Paul,’ the rate of growth of Jamaica’s debt is largely influenced by repayment schedules of debt and revenues and expenditure out-turns. In the absence of a projected repayment schedule, it is difficult to say whether the 95 per cent debt-to-GDP ratio is achievable. What is clear is that the proposed $17 billion annually to be garnered from JDX2, will not by itself be sufficient to reduce the debt ratio to the desired 95 per cent of GDP. Other revenue measures will clearly be required to close the bulk of the gap.

ELIMINATING THE FISCAL DEFICITJamaica’s fiscal deficit currently amounts to $48.3 billion. Theoretically, reducing the deficit can be achieved by increasing revenues and/or cutting back expenditure or through debt restructuring. Further reduction of expenditure on the capital side of the budget is seen both the Government and the IMF as deleterious to the country’s infrastructure.

SpecialEconomic

Report

17

The public sector unions and workers, and many in civil society, allege that there is limited room for reduction of recurrent expenditure. At the same time, many financial institutions claim that any further debt restructuring involving significant rate reduction (JDX2) will push them into insolvency and it is difficult to say how many of the smaller financial institutions will ‘voluntarily’ take-up the GOJ’s offer. In addition, many analysts contend that given Jamaica’s weak, over-taxed economy, further significant tax increases will push the economy from recession into depression. Despite these objections and dire possibilities, Minister Phillips has stated that further tax increases and expenditure cuts are definitely part of any new GOJ/IMF Agreement.

Despite the effects of revenue increases and expenditure cuts, it is possible that the GOJ could eliminate the fiscal deficit over the next two years, especially if tax and other structural reforms yield expected revenues and savings. Furthermore, when it is recalled that over the two-year period from 2009/10 to 2011/12, the GOJ cut the fiscal deficit from $123 billion (12 per cent of GDP) to $46 billion (4.5 per cent of GDP), it is fair to say the odds, if not the economics, appear to be in their favour. Still, it seems only a stronger global recovery feeding through the local tourism and bauxite sectors and strengthening markets for Jamaica’s exports are likely to mitigate the contractionary effects of these policies.

REDuCING CENTRAL GOvERNMENT WAGE BILLReducing the wage bill from about 11 per cent of GDP to nine per cent appears to be the measure the GOJ has the most control over. Yet, both the current previous administrations have been reluctant to face the political challenges involved in making the necessary adjustments. The previous JLP administration commissioned a ‘Public Sector Master Rationalisation Plan’ in 2011, which purports to cut 10,000 positions (mainly by attrition) over five years up to 2015/16. Minister Phillips says some 5,000 positions in Central Government have been cut so far by not filling those positions. However, very few numbers have been offered as to how these cuts tally up in relation to the goal of reducing the public sector wage bill to nine per cent of GDP.

INCREASING THE PRIMARy SuRPLuSIncreasing the primary surplus from about 3.5 per cent ($31.0 billion) currently to 7.5 per cent of GDP (about $75 billion) in one year will require an additional $45 billion. To the extent that the GOJ succeeds in reducing the fiscal deficit, then it should be easier to boost the primary surplus. But it is difficult to see how the government is going to close a $45 billion gap in one year without drawing down on surpluses in some statutory organisations like the National Housing Trust, reputed to be holding surpluses exceeding $150 billion.

Ultimately, to achieve and lock in the gains of debt and deficit reduction and increasing the primary surplus, an improved growth performance and implementation of the structural reforms proposed are required.

Reducing Jamaica’s debt to GDP to 95 per cent by 2020 from current levels of about 133 per cent

Reducing the Central Government wage bill to nine per cent of GDP by 2015

Increasing the primary surplus – the difference between revenues and non-debt expenditure – to 7.5% of GDP in year one of the agreement

In addition, several structural reforms – finalising tax reform and public sector reform and the virtual elimination of all waivers are proposed as important ‘prior actions’ or, are to be ‘frontloaded’ for the IMF to sign off on a new Agreement with the GOJ.

Previously announced on October 23, 2012, but not elaborated on in the Minister’s most recent pronouncements: virtually eliminating the fiscal deficit from currently 4.5 per cent of GDP to zero by 2015/16; and, One key prior action announced by Dr Phillips was the February 12 launch of a voluntary National Debt Exchange Offer – already dubbed ‘JDX2’ by some commentators. This is expected to generate $17 billion in interest savings annually to the GOJ over the next seven years and is conceived as an important contributor to the objective of reducing Jamaica’s debt-to-GDP ratio to 95 per cent by 2020.

Though a lot more details will likely come when the GOJ/IMF agreement is finally tabled in Parliament, of special interest to observers is how will some of changes or initiatives impact the economy or particular sectors and whether the putative objectives outlined above are realistic and achievable. This is critical to whether the IMF programme and the efforts to achieve fiscal stability and economic reform are sustainable.

The other main features of the proposed new

arrangement outlined by Dr Phillips are as follows:

18

NET INTERNATIONAL RESERvESDuring December 2012, Net International Reserves recovered modestly, increasing by US$47.4 million to US$1,125.6 million, compared to US$1,078.2 million at the end of November 2012. This reverses 20 consecutive monthly declines, but it is probably not a trend reversal as the factors driving the decline in NIR – weak export earnings and declining confidence in the Jamaican dollar – have not abated. During calendar year 2012, the NIR declined by -US$841.4 million. This was largely due to continued net selling of the US dollar since May 2011 by the BOJ to support the Jamaican dollar and also the fact that earners of foreign exchange have been holding rather than selling into and replenishing the private market for foreign currency.  At the end of December 2012, gross reserves were adequate to finance 17.6 weeks of ‘goods imports or 12.88 weeks of ‘goods and services’ imports, just slightly above the 12 weeks international benchmark of reserves adequacy.

FOREIGN ExCHANGEUS Dollar: During December 2012, the Jamaican dollar depreciated by an additional $1.18 against the US dollar to $92.98, compared to $91.89 at the end of the previous month. After several months of testing, the Jamaican dollar finally breeched key psychological resistance of US$1 = $90 in October 2012 and has experienced accelerated decline since then.  Pound & Canadian Dollar: During December 2012, the Jamaican dollar depreciated by an additional $4.90 or –5.32 per cent against the pound to $152.64 from $147.74 in November 2012. Against the Canadian dollar, the Jamaican dollar also depreciated by $0.45 or 0.48 per cent to sell for $93.51, compared to $92.86 in November 2012.  FISCAL ACCOuNTSDuring the eight-month period (Apr-Nov) of fiscal year 2012/13, the Government of Jamaica ran a fiscal deficit of –$48 billion. This fiscal deficit was $2.07 billion or –4.5 per cent worse than the –$46.20 billion budgeted but was $4.9 billion or 9.2 per cent better than the –$51 billion deficit recorded during the corresponding period of FY2011/12. The worse than expected out-turn on the fiscal deficit largely resulted from a $10.32 billion shortfall in collected Revenues and Grants which was only partially offset by expenditure cutbacks of $8.3 billion. 

OtherEconomic

Highlights

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THE GLOBAL PICTuREThe consensus among analysts is that the global economy continued to improve during December 2012, despite the up and down movements of various data. In the United States, Q4 2012 GDP fell into negative –1 per cent territory due to a massive 15.4 per cent reduction in government spending, led by a 22 per cent drop in defense spending. This pullback in defense spending was ostensibly sparked by fears of the automatic spending cuts that will ensue if US lawmakers do not agree on a debt reduction deal to avoid ‘sequestration’ by the end of March 2013.  Despite the fall off in the US Fourth Quarter GDP, the out-turn for the whole year (2.2 per cent) was better than the 1.8 per cent expected and other data demonstrated that the US recovery is taking hold. Non-farm Payrolls for December 2012 of 153,000 were roughly in line with expectations, but US monthly job creation for 2012 was revised upward to an average of 181,000 from previous estimates of 150,000. Consumer spending and consumer confidence were also up, though there was some slippage in new and pending home sales.  In China, for the second month in a row, the Purchasing Managers Index (PMI) for Manufacturing was in expansionary mode at 51.9 after five previous months of negative reading during the second half of 2012. Chinese Services industries also recorded stepped-up expansion during the month.

Though there was some slippage in Britain’s Q4 2012 GDP to –0.3 per cent, sparking fears of a ‘triple-dip’ recession in the UK, there were signs of turn-around in the form of a lessening rate of decline in several other European countries. Eurozone PMI was up to 48.2 compared to the previous reading of 47.2; and Euro-zone Economic Sentiment was up to 31.2 compared to November’s reading of 7.2. Though the sailing is far from smooth, the global economy appears to be moving forward.

The highlight of the SCNS meeting on January 15 was the attendance of Minister of Justice Senator the Hon Mark Golding. Senator Golding was previously invited to the SCNS meeting on March 1, 2012, shortly after assuming office as Minister of Justice and was apprised of the role and activities of the SCNS. At that meeting, the Committee had voiced its concerns about the worrisome state of the justice system – the backlog of cases and the inordinate delay in having legislation passed. The minister, in the meeting on January 15 gave a follow up on the progress on these areas.

Another action item for the SCNS was realised when Minister of National Security agreed to meet with the Committee on January 30 as a follow up to the meeting held March 13, 2012, 100 days after he had assumed office.

Standing Commitee

on National Security

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The Crime Stop Coordinator’s report highlighted the following for the month of January:

• The number of calls received in January was 83, an increase of 44 over the 39 calls received in December 2012.

• The success ratio was 1:6, compared to 1:9 in the previous month.

• The number of arrests in January was six, three more than the previous month.

• The number of calls made to 311 was 76, an increase of 44 over the 32 calls received in December 2012.

• A total of $42,200 was paid out in January. This represents an increase of $2,000 over the $40,000 that was paid out in December.

• $8,494,300 was the value of narcotics recovered in January, compared with a value of $1,206,000 for the narcotics recovered in December 2012.

Crime Stop

• The Minister made a presentation to the Committee entitled ‘Invest in National Security: Fastest Return on Investment.’ Jamaica, battling a very high crime rate with sophisticated criminal networks, was doing reasonably well with very limited resources compared to its counterparts in other jurisdictions who were better equipped and in a better financial position. The minister, using data collected on countries that had made significant investments in national security, said that these countries experienced, almost immediately, a significant reduction in their crime rate. The minister felt that if this type of investment was made in national security in Jamaica, a similar situation would result.

• To this end, he informed the meeting that the ministry would be vigorously pursuing media/public awareness campaigns to educate the public and would also be working with the private sector. He further advised that a meeting would be held with major media owners to advance discussion on this media campaign. PSOJ CEO Sandra Glasgow suggested that the minister consider including Crime Stop in this media campaign.

• The PSOJ, in continuing the dialogue on providing solutions to national security, will be hosting sponsored security forums in the parishes of Clarendon, St Ann, and St James. Minister Bunting was invited to speak at these events and consented. The PSOJ is to follow up with a formal letter of invitation to the minister.

Highlights of this meeting:

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NEW MEMBERS The PSOJ welcomed the following new members during the month of January:• BCW Capital• Sure Loyalty Solutions • Green Sun Energy Plus Limited• Indies Pharma Jamaica

INDuCTION OF NEW MEMBERSAn induction ceremony was held on January 29 at the Chairman’s Club Forum at the Wyndham Hotel. The following companies/individual were inducted:

APPLICATIONS FORMEMBERSHIP APPROvED By PSOJ ExECuTIvE:• Gas Products• Toyco Limited (trading as Hotel Four Seasons)• Interglobal Technology Solution

Membership application with required information to be submitted at the next Executive Committee meeting in February:• Caribbean Producers Jamaica

PROSPECTS SENT INFORMATION DuRING THE PERIOD:• Camcorp Industrial• Judith James• International University of the Caribbean• CSS Jamaica• Rubis-Caribbean (formerly Cool Petroleum)• Jamaica Organic Agriculture Movement• Ashebre• Fabric Consultants• Unique Media• SMS

MEMBERSHIP CATEGORy: CORPORATE• HRM Options Group International• Jamaica Insurance Brokers Association • DHL Express• BCW Capital• Sure Loyalty Solutions • Green Sun Energy Plus Limited• Indies Pharma Jamaica• Sterling Asset Management Limited

MEMBERSHIP CATEGORy: INDIvIDuAL• Marian Ross

Membership

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IDB/NCB PROJECT- ATN/12712-JAOn November 16, 2012 an Agreement was signed between IDB and NCB for the project, ‘Institutional Strengthening of NCB for the Expansion of Small Business Financing.’ A Sub-Agreement took effect on October 1 between the PSOJ and NCB. The PSOJ has been hired as the Project Management Office. The period for this project is 24 months.

The inaugural meeting of the Project Steering Committee (PSC) was held on January 8. This meeting focused on getting the activities of the project going with the hiring of the Project Manager, opening of the bank accounts, reviewing and approving the contents of the Operations Manual etc.

Following the PSC meeting, the project account was opened on January 28 and the interviews for the post of Project Manager were conducted on January 31.

yuTEyuTE Launches Services for urban youth BookletYUTE participants and their peers living in urban communities now have a resource guide. YUTE launched its resource guide, Services for Urban Youth on January 15 at the Olympic Gardens Civic Centre. The event was well attended by sponsors, YUTE participants and representatives

of youth-serving organisations. Services for Urban Youth is a resource guide for young people desirous of accessing services and information on areas critical to their wellbeing, including health services, the justice system, social welfare and essential documents such as tax registration numbers and birth certificates. The booklet was produced based on the experiences of YUTE participants, who shared the challenges they faced in accessing information on critical services.

In delivering the welcome, YUTE Chairman Joseph Matalon acknowledged the support YUTE receives from a range of private and public sector entities and various international development partners. These partnerships contributed to the execution of programme activities that meet the needs of vulnerable youth desirous of successfully transitioning to employment and employability. CEO of the CHASE Fund, Billy Heaven, voiced his satisfaction with the booklet and encouraged the participants to read the contents carefully, especially the section dealing with business start-up. Similar sentiments were echoed by Debra Guinness-Brown from the National Health Fund, who commended the YUTE Programme for taking the initiative to produce such a useful resource.

Projects

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Minister of Youth and Culture, the Honourable Lisa Hanna lauded the work of Development Options Limited and the YUTE Programme. She noted the care that had been taken to ensure the youth-friendly format of the booklet and endorsed the contents as relevant to the needs of urban youth preparing for employment. Youth were encouraged to read the booklet, and to share the information with their peers and siblings.

All YUTE participants are being provided with a free copy. Schools in communities served by the programme will also receive copies for their libraries and guidance departments. Additional copies are available at a cost of $500 through the YUTE Programme Management Office.

yuTE/NyS TRAINEES READy FOR APPRENTICESHIPSOne hundred and five young people graduated from the YUTE/National Youth Service training programme for teacher’s aides and administrative assistants on January 8. The smartly clad graduates were greeted on behalf of the YUTE Programme Manager, Maureen Webber and the Executive Director of the NYS, Richard DePass. They were reminded that their participation in the programme was linked to their own personal and professional goals and, as such, they had the primary responsibility for making the most of the experience.

Guest Speaker Karol Fernandez had the graduates’ full attention during her inspiring presentation. She encouraged the graduates to consider their placements not only as jobs, but as opportunities to serve. She charged the participants and well-wishers to always think and act in a manner befitting someone “worthy of self-reliance and trust.” Teaching aides were admonished to enjoy what they were doing and to creatively and wholeheartedly support the teachers and students in the learning process. Those being placed as administrative assistants were advised to give excellent customer service to both internal and external clients.

Top achiever in the business administration corps, Romario Fearon, thanked YUTE and the NYS for the apprenticeship opportunities on behalf of the graduates. He shared that it had been a good learning experience for all participants, and expressed confidence that they would thrive in their placements.

The YUTE/NYS apprenticeship programme will see participants working in various private and public sector roles over a 12-month period. Upon completion, participants will receive Level 1 certification in teachers’ assistants and business administration.

yuTE MENTORSHIP TRAINING SESSIONS RESuMEThirty-seven new volunteers were trained as mentors in January, as YUTE moves to mobilise support for participants in skills training. Supported by members of the Jamaica Public Service Company team and the Kiwanis

Club of East St Andrew, January saw a surge in applications, with 29 persons applying to volunteer.

Training sessions were held on January 16 and 25 and saw attendees being introduced to the fundamentals of mentoring. Feedback suggests that the training was informative and engaging, and solidified the attendees’ commitment to providing support and guidance to their future YUTE mentees. The mentors will be matched in February.

MARKETING AND PuBLIC RELATIONS DEPARTMENTChairman’s Club ForumThe first event in the 2013 series of the LIME and NCB sponsored Chairman’s Club Forum was held on January 29 at the Wyndham Kingston Hotel with Guest Speaker, Hon Andrew Holness, MP Leader of the Opposition, Jamaica Labour Party.

Holness spoke on the Opposition’s position on the IMF negotiations and the solutions it views as critical for an agreement.  His presentation was followed by questions from the audience. The event was well attended and received good media exposure.

MENTORSHIP OF EMERGING ENTREPRENEuRIAL LEADERSPlans were being made for a January 30 Mentorship of Emerging Entrepreneurial Leaders Dinner. However, this date was no longer convenient for the guest mentor. Efforts were made to find another mentor, but due to short notice this was not successful. Plans are now actively being pursued for the February event. A schedule outlining proposed guest mentors and mentees for the year is being done.