Dr Peter Phillips
KINGSTON, JAMAICA -- Opposition spokesman on finance and planning and former minister of finance of Jamaica, Dr Peter Phillips, has proposed that Caribbean governments and private sector extend economic cooperation beyond the Caribbean Community (CARICOM) in order to bring about greater economic growth and lasting social progress for the people of the region.
“We need to actively integrate the Dominican Republic, Haiti to a greater degree, and selectively those other Latin American countries bordering on the Caribbean. This will encourage diversification of the productive base of our own economies and encourage foreign direct and other investment flows,” Phillips told local business leaders and global analysts attending the 12th Regional Investments and Capital Markets Conference hosted by the Jamaica Stock Exchange on Wednesday in Kingston.
He said that to achieve this, the Jamaica Stock Exchange should explore the possibility of allowing companies from these jurisdictions to list on the local stock exchange. He noted that already one Jamaican company – GraceKennedy – is operating in some of these jurisdictions with operations in Costa Rica, El Salvador, Dominican Republic, Belize and Guatemala.
Such private sector leadership in the region, he accepted, would need to be accompanied by Government actions to negotiate effective free trade agreements, tax treaties and common regulations and arrangements for doing business.
Phillips, who was speaking on the topic “The Right Leadership: The Way to a Great Regional Future and Greater Options”, said Jamaica had provided leadership in the Caribbean in the attempt to turn around its economic fortunes and reverse negatives indicators shared across the region such as high debt, low growth and large fiscal deficits. Growth across the region, he pointed out, has for the most part been below five per cent on average everywhere except the Dominican Republic.
Average gross debt, he noted, is 72 percent of GDP – making the Caribbean the most heavily indebted region in the world. Using 2015 figures, he disclosed that Jamaica, with a debt to gross domestic product (GDP) ratio of 122 percent stands out as the most highly indebted in the Caribbean followed by Barbados 105 percent and Antigua and Barbuda at 104 percent. This high debt has had the effect of slowing investments in the region, the opposition finance spokesman noted.
However, Jamaica’s example, he said, had seen the country, during the period when he was minister of finance, significantly reducing the national debt, eliminating budget deficits, running a balanced budget and with debt reduction, sustaining a high primary surplus of seven and a half percent GDP through 2013 to 2016.
Other achievements he reminded the business audience, included extensive tax-reform, which among other things, reduced rates including effective corporate tax rates. There were also extensive legislative reforms aimed at improving the ease of doing business.
Describing the current situation in the Caribbean as bleak, Phillips said that following the global crisis of 2008/09 Caribbean states remained economically fragile and vulnerable with limitations to the development strategies being pursued. Poverty and region-wide unemployment of 13.5 percent, he said, were still at unacceptably high levels.
This is the scenario which he said could benefit from the Jamaican experience with economic reform which has resulted in growth returning and gathering momentum. He explained that despite Jamaica’s strenuous efforts and success in other countries such as St Kitts, the debt, unemployment and poverty remained too high. This added to risks associated with global financial markets, climate change and others inherent in the social and economic inequalities within Jamaica and other Caribbean societies. One obvious manifestation of this, he pointed out, is the rise in crime, which he said was not solely attributable to these inequalities, but was not unrelated, especially given the underfunding of the security sector.
In this regard, he added that taxation policy which places the burden on the most vulnerable in the population, without mitigation, is a recipe for instability.
He again warned that in this delicate economic situation and with big deficits in the delivery of social services, notably education, health and security, Caribbean governments cannot afford to be fiscally irresponsible and ‘run with’ unprogrammed expenditures such as millions for ‘bushing’ work.
Citing the importance of collaboration involving all sectors to achieve the start of an economic turnaround in Jamaica, Phillips concluded that perhaps the greatest lesson for leadership to be derived from the recent Jamaican experience, is that all elements of the population must be brought together in a genuinely collaborative and equitable partnership to build a different and better future for the Caribbean.