ADDRESS BY PSOJ PRESIDENT CHRISTOPHER ZACCA TO THE LIONS CLUB OF KINGSTON, JANUARY 9, 2013 AT THE JAMAICA PEGASUS HOTEL
Ladies and Gentlemen, good afternoon and thank you for inviting me to address you today. I would like to wish you all a happy and healthy 2013 and hope that this year you redouble your commitment to serving your community through the Lions Club. “They got so much things to say right now, they got so much things to say”…..the words of the immortal Bob Marley. Isn’t that the truth? And where do I start? I had hoped, in my first public speech for 2013 to turn to the Private Sector’s Growth agenda for Jamaica, and move beyond and away from the dreaded “I” word. Unfortunately, due to the continued lack of an IMF agreement, and a seemingly unexplainable lack of widespread public discourse by the Government, our Prime Minister, and other members of the Cabinet other than the Minister of Finance, on the details and issues surrounding the potential IMF agreement, I am forced to continue the PSOJ’s advocacy on this issue. Where we are: But first, some background information: Since independence, World Bank Figures suggest that Jamaica’s per capita GDP has grown at an annual average of 0.6%. This is one third the average Global Growth Rate per capita of 1.8% since 1962. A recent PIOJ document underscores this stating:
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“the Jamaican economy has exhibited a pattern of underperformance in terms of overall growth. This chronic pattern of underperformance has left in its wake a high level of public debt, unemployment, deterioration in physical infrastructure and in the delivery of social services (such as health, education and the justice system). These inherited conditions underpin significant and persistent levels of poverty as well as the continued existence of marginalized, vulnerable, and volatile communities throughout the country.” This tremendous debt overhang caused by a consistent lack of growth and the practice of successive governments spending more than it earns, coupled with a weak global financial system and economy, have taken Jamaica right to the edge of its very own fiscal cliff. We are now at the stage where we have to deal with this tremendous debt overhang, pull back from this treacherous cliff, and create a sustainable foundation for future growth. Just look at what people internationally are starting to say about Jamaica. From a Chicago Tribune Editorial yesterday, I quote: “Jamaica actually is in worse financial shape than Greece… Jamaica is caught in a debt trap….Defaulting on its debt would ruin Jamaica's prospects for many years to come: It would undermine the island's critically important trade relations with the U.S. It would discourage badly needed foreign investment in its tourism, agriculture and mining sectors. The only thing worse than doing what Jamaica must do to live within its means would be not doing it…..Jamaica has few options, apart from beseeching the IMF….While the rest of us wait to see whether the island nation escapes its debt trap, we'll see whether other countries learn the lesson of Jamaica: Stop digging such deep, deep holes in the beach.” Folks, make no mistake about it, the Jamaican economy is in crisis and it is my view that the continued lack of an IMF Stamp of approval will push it deeper into crisis. Why we must get an IMF agreement: 2 | P a g e
I would like to remind you and the public of the consequences if we don’t get an IMF agreement. (a) A dramatic fall in business and consumer confidence; (b) Significant deterioration in international and local financial sentiments; (c) Continued delay in the disbursement of funds or even worse, a significant loss of financing from our other International Development Partners; (d) A deterioration in market sentiments against Jamaica which would undoubtedly be supported by the assessments of rating agencies, i.e. eventual downgrades; (e) A further reduction in the Net International Reserves; (f) Increased speculative attacks against the Jamaican dollar leading to a more rapid and significant depreciation of the Jamaican dollar accompanied by higher inflation. (g) Domestic nominal interest rates would obviously rise in response to the higher inflation and currency depreciation, depressing domestic production activity, reducing the growth of investment and increasing the likelihood of job losses; (h) And finally an unsustainable downward spiral of our financial system and economy would occur, leading to a widespread collapse in our Economy and much increased poverty. Ladies and gentlemen, any person that suggests that a Plan B without the IMF at this point is a viable alternative for our country is not thinking straight. Such a train of thought risks plunging us into the abyss and significantly hurting all of us, most of all the most vulnerable of us, the poor, the marginalised, and the aged, and should be totally discredited. What our Government must lead us in doing:
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We are one of the three most indebted countries in the entire world, and we are part of a trading block, Caricom, which contains 5 of the top 6 most indebted countries in the world. Isn’t that astounding? Doesn’t that tell us that our governance and economic management structures are not working and need radical overhaul and restructuring? Our Economy is broken and needs fixing. The thing is that we need to fix the Jamaican Economy for Jamaicans, not for the IMF. The solutions that will satisfy the IMF are the very same solutions that we ourselves must come up with and all must buy into. And that process must be led by our elected Government. The Jamaican private sector stands united, as a result of efforts by its leaders and associations, and is ready to be part of the solution, starting with getting an IMF agreement, the crucial first step. The solution must involve short term pain and equitable burden sharing and we are fully aware that the private sector will have to share in the pain and ready to play our part. But we can't be a part of the solution unless we are told what is expected of us. I can speak for myself and the PSOJ in saying that we have a feeling of helplessness due to there being little sense of what are the nitty gritty details of what are proving to be the "sticking points" in the IMF negotiations and how far away are the parties on these points that they have been battling over for quite some time. If we are to continue to support the Government negotiating team then it is full time that they share these details with us so that we ourselves can provide our input and as a result increase the buy in from ourselves and the rest of civil society. But more than just the details of what is in the IMF negotiations, we want to know the bigger picture being proposed by our Government. The PSOJ wants to know just how our political leadership proposes to chart the course and in fact change the course to make Jamaica the place of choice to live, work, raise families and do business, by 2030. The Cabinet goes into retreat tomorrow through Saturday. The nation is awaiting the results with bated breath. I would like to join other voices in calling for the 4 | P a g e
following details and plans to be spelled out to the nation after the retreat with sufficient clarity and specificity to give us a clear picture of where we are going in our economy in four key areas: 1. Reducing the cost of our public sector’s share of our economy, and modernising and transforming it so that it becomes an efficient enabler of progress. How do we plan to treat wages, benefits and institute real pension reform? How do we at the same time bring about real transformation, creating a whole new platform so that our Public Sector can deliver their much needed services efficiently, in a motivated way, and with a greater customer service ethic? 2. Modernising and improving our system of tax policies, incentives, and tax collection. How is it proposed that we move away from a complex and outdated system of high tax rates with numerous waivers and special exemptions not tied to performance, to one that lowers the overall rates but casts a wider net, while at the same time retaining results based incentives that maintain the global competitiveness of our key industries and sectors? 3. The creation of a business friendly environment for growth: How do we intend to slash unnecessary and corrupt bureaucracy? What measures are going to be taken to get Government out of the way of business people and allow them to go out and do what they do best, which is invest, create jobs, and grow the economy? In what way will the Government reprioritise its expenditures to spend on infrastructure that will strengthen our resilience and open up opportunities for development? How quickly will you move to pass critical business enabling legislation such as a new insolvency law, and a new secured transactions act? 4. And finally and maybe most importantly the protection of the most vulnerable in our society in these tough times of restructuring, the Poor, 5 | P a g e
the marginalised, the aged: How do we intend to strengthen the social safety net? How do we intend to rechannel very scarce resources to the poor? Not only in terms of the structure of our cash programmes such as PATH, but also in terms of retraining, resocialisation, security considerations, and basic infrastructure such as sanitary facilities? Ladies and Gentlemen, I put it to you that coming out of the retreat with nothing less than a clear vision around these issues backed by a plan with details and basic timelines is enough to satisfy civil society at this time. The Way Forward: So let us assume that we get an IMF agreement, and our leaders outline the plan. Team Jamaica now needs to hold hands and unite to get us to a better place of sustainable growth. Politics-‐as-‐usual and its attendant divisiveness and paralysis needs to be put aside when it comes to the three or four critical issues such as our debt, crime and education. We need a new consensus that brings us together as Jamaicans, to stop us from following each other like lemmings over the cliff and into the abyss. We are at a crossroads, and I call on the Prime Minister to act decisively, talk to her people and level with us as to the way forward; I call on the Leader of the Opposition to avoid distractions and focus on providing credible alternatives where he disagrees with the Government’s path, but to provide wholehearted support where the path is right; I call on the Union Leadership to continue to be responsible and be a part of the solution as long as they are treated with respect in the time honoured tradition of our country; I call on Civil Society to mobilise support for the right things that need to be done and to accept that we have to make real painful choices; I call on my colleague leaders in the Private Sector to contribute whatever we can to the burden sharing and to redouble our commitments to pay our taxes, to invest in Jamaica, and to buy Jamaican. Together we can pull back from the cliff and walk to a better place. Together we can fill in those metaphorical holes that the Chicago Tribune Editor says we have
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dug into our beautiful beaches, and make them beautiful again. The future is indeed full of bright possibilities. Thank you and have a great and productive afternoon. CHRISTOPHER ZACCA PRESIDENT THE PRIVATE SECTOR ORGANISATION OF JAMAICA JANUARY 9, 2013
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