Strategies for Stimulating Growth and

Transcript:Strategies for Stimulating Growth and:
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 Outline Sustained Economic Growth Role of Government Strategies for Stimulating Growth in Jamaica Economic Transformation Programme Progress to date Concluding Remarks 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 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 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 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 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 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