Jamaica Stock Exchange 19th Regional Investment & Capital Markets Conference
Keynote Address
By
The Most Honourable Andrew Holness ON, PC, MP
Prime Minister of Jamaica
At the
Jamaica Stock Exchange
19th Regional Investment & Capital Markets Conference
On
January 23, 2024
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Thank you, Michael, for establishing the protocol.
It is a pleasure to be here at this, the 19th staging of the Regional Investments and Capital Markets Conference, the signature calendar event for the investment and capital markets industry. Now, I have a long unbroken record of speaking at this conference and probably the only person to beat that is Gregory Fisher.
This conference holds significant importance by uniting stakeholders, corporate executives, and national and regional Government leaders. Its purpose is to facilitate the exchange of information and explore current trends in the capital markets, as well as emerging products and services within this sector. The goal is to expand the market and encourage increased participation. Today, I stand before you to share the good news that Jamaica boasts the most favourable economic environment since gaining independence.
We now have 10 consecutive quarters of economic growth since the pandemic. Prior to the pandemic, we had a long stretch of 20 consecutive quarters of economic growth. My government has established a solid track record for sustained growth. In fact, my administration has presided over the longest unbroken period of economic expansion since independence.
And notice I’m not shy about saying my administration because everything else that is heaped on, I have to own it as well, so I claim the good.
Unemployment is at a record low of 4.5%, that’s the lowest in our history. Since taking over in 2016, my administration has created 146,700 new jobs. We are on target in terms of our debt-to-GDP reduction to now reduce our debt-to-GDP to 74% by the end of March 2024. This is well below pre pandemic levels and the lowest in 25 years.
Our credit ratings are now at the highest level they have ever been. In September 2023, Standard & Poor upgraded Jamaica’s rating to BB-. Recall that we are coming from CCC rating and that we spent a decade in the B category with the last four years at B+.
For the last fiscal year, 2022/ 2023, Jamaica recorded a balance of payment surplus on our current account of US 352.4 million dollars. The last time that Jamaica had a current account surplus, can anybody guess; 1966. Our net international reserves are now at a record high of US 4.75 billion dollars as at the 31st of December 2023. We have created an environment of fiscal certainty with eight consecutive budgets with no new taxes.
Now my script says inflation has been tamed and is trending down but what I will say is inflation is trending down. And of course, of importance to all gathered here, falling inflation means that interest rates will soon follow. Yes, I hear the very loud whispers in the corridors of how businesses have been affected. The government is doing, in my estimation, an incredible balancing act because for a country like Jamaica, the devastation of inflation is very real for our population and therefore in the calculus of where would government policy come out, it has to come out on the side of ensuring that the population that is now just beginning to see benefits of the economic programme, that they are not exposed to the devastating impact of inflation.
As a result of this very positive economic environment, we’re seeing unprecedented levels of investor interest in Jamaica. Global investors who in the past would have seen Jamaica as too risky are now taking serious interest. Just on the weekend, we broke ground for a 1.4-billion-dollar investment to build four towers of 28 stories each; that is a massive investment. And we have several other large investments of that magnitude to announce in the coming months.
In November 2023, the government of Jamaica issued a Jamaican dollar linked international bond in the amount of JMD 46.6 billion dollars, the equivalent of US 300 million dollars. This is the first time in our history that Jamaica has been able to issue a Jamaica dollar linked bond in the international capital market. This is a clear signal of confidence.
Despite all of these economic achievements, we are not resting. I can assure you that my administration remains laser focused, and we are focused on two things. The first, how do we accelerate the level of our economic growth from 1% to 2%, to 5% to 6%, that is the challenge.
We have achieved in my mind, the first stage, which is to ensure that growth is sustained. And I think we can safely say by the number of consecutive quarters of growth that we are able to sustain growth and that our growth is not erratic, and we have managed to do this by ensuring that we build in buffers and fiscal safeguards to ensure that we can recover quickly from shock.
For most of our post-independence period, economic shocks, whether caused by global factors or by weather events, would set us back for several years, even for decades. The last big shock, the 2009 financial crisis took us 10 years to get back to the GDP of 2009. Now, the last shock, which was a COVID 19 pandemic, we were able to recover very quickly and not just recover but recover stronger.
The other major focus is on inclusive growth. Our vision for economic growth goes far beyond mere statistics, it is about creating opportunities for all. We will leave no one behind. We are focused on translating our economic success into tangible and inclusive economic gains that touch the life of every Jamaican.
For most of our post-independence period, we have been caught in a vicious cycle of unsustainable spending, debt, and poverty. My government is focused on creating a virtuous cycle of peace, productivity, and prosperity where peace and productivity lead to greater prosperity for all, which in turn leads to greater peace and productivity. This is what we call the caring economy. So, we’re not just about growth and numbers, we all must recognize that growth is about people. And in a country like Jamaica, where historically the people have not always been at the centre of the growth equation, this administration must always recognize the weight of the history and struggle of our people and ensure that as our economy begins to show the signs of sustained growth, that people are at the centre of that growth, our economy must care about people.
So, a part of this caring economy is how do we make the economy facilitate, support, inure peace? Peace has to be a consideration of the growing economy. Acknowledging this, we can report that we are making significant progress in sustainably addressing crime. We need to make more progress in addressing violence. Too often, when we talk about crime and violence, we lump them together as one. Of course, they’re probably two sides of the same coin, but they require two different strategies. You can deal with crime via policing, but you can’t always deal with violence via policing.
Other strategies have to be employed, and therefore we have to turn our economic resources to deal with violence because violence has a significant drag effect on our economy. Violence has a significant impact on our productivity and therefore, as we build this caring economy, we are going to be directing public resources to treat with this issue of violence. But for the record, as I address this audience, it is important to note that homicides are down by 7.8 percent in 2023 relative to 2022. And if we take the first 22 days of the year to represent the last 22 days of the year if it follows through. For the first 22 days of 2024 murders are down 21 percent relative to the first 22 days of 2023. All serious crimes, homicides, shootings, rape, robbery, and break-ins are down 10.7%. This is the lowest in 22 years. So, yes, we’re definitely having an impact on crime. Where we need to now start to have an even bigger impact is on this social phenomenon, this public health crisis of violence.
In moving towards that, we have straightened legislation. There’s a new Firearms Act, we have a new Bail Act and very soon we will make amendments to the penalties under the Offenses Against the Persons Act, which will increase the mandatory minimum sentence for murder before being eligible for parole.
We have greatly strengthened the capacity of our security forces and I want to spend a very short time to say, have you noticed that the investigative capacity of our security forces has increased significantly? They are now bringing to our courts cases that before would have gone unsolved and they’re doing it in quite a rapid way, and I want to acknowledge the significant improvements in the JCF.
We will continue our fight against crime, and we will also broaden our focus to treat with violence. This audience will immediately appreciate the point that I’m about to make. This is not the first time that the government of Jamaica has had to bring the resources of the state to treat with violence. Jamaica successfully conquered violence in our politics. In the 1970s and 80s, violence was a significant feature of our politics but through legislative changes, institutional changes and partnerships, we were able to form the Electoral Commission. We made changes to the representation of the People’s Act. We put in place an ombudsman and other measures, and we have conquered political violence. We have had at least four elections now and there has been no taint of political violence so we can do it. We can conquer social violence. We can conquer intimate partner violence. We can conquer domestic violence, providing that we can come together as a country in partnership to pass the necessary laws and to make the necessary allocations for social support to ensure that our people do not resort to violence as the first opportunity to resolve conflict so I’m confident that we will be able to treat with this issue of violence. And once we do this, we’re going to see an increase in our productivity.
Now, as a result of our historic low unemployment rate, we are now faced with a new challenge; Angus mentioned it earlier. The truth is that the binding constraint on our economic growth is no longer the availability of capital. The binding constraint on our economic growth is labour. Well, put it in another way, the binding constraint on our economic growth right now is the availability of talent.
Jamaica, through its history, has exported talent to overseas to build other countries, to support other countries economic growth and now, with our economy starting to show signs, we need talent. It is very worrying to me that I have started a school tour to start to speak directly with those students who are about to transition from high school. I can’t say to them, don’t migrate because migration is important for their exposure, for them to develop the talents that they have and gain the experience but to put a kind of thinking in their minds that they can make it here in Jamaica as well; that even if they go, they’re going to come right back. That is where your economy is right now. There’s scarcely a businessperson that I speak to who does not say, Prime Minister, I cannot find people.
So today I met with the Kingston Chamber of Commerce and that was a part of the discussion. We have too long been a low wage, low growth economy. We acknowledge that, but you would also see that the government has made instrumental attempts and actions in doubling the minimum wage, engaging in a compensation review that moves a significant part of the labour force closer to market all whilst trying to ensure that we manage wage inflation. It’s a very complex equation. It’s a balancing act as we keep this economy moving forward steadily. Any erratic move can destabilize the economy.
So yes, we recognize the low incentives that exist in the current wage profile of our economy but that is changing. In our school tour, I have had to point out that growth can only take place when there is productivity increase and every single Jamaican has to recognize their part, their role in increasing their own productivity. We have to encourage and support the development of a culture of productivity. And we’re trying to support that emergence of the culture by putting in place, certainly that should come within the next two years, performance-based reward systems in the public service and we encourage the private sector. I know many firms do that, but I think in this current era, all firms should have performance management systems in place.
We’re not taking it for granted that our young people will leave high school and automatically transition into the world of work so we’re spending almost 2 billion dollars on the LIFT Programme, (Learning and Investment for Transformation under the Heart Trust/ NSTA. We have graduated this year 500 students under the LIFT Programme, they’re all taken up into firms; many of the firms are represented here, and that will ensure that there is seamless transition. That’s a strategy to make sure that we don’t lose the talent. So, these are six formers that we have made it possible for them to have internships in firms so that the firms can start to make deliberate connections with them to keep them here.
We have the Jamaica National Service Corps, where the Jamaica Defence Force trains almost 2,000 youngsters per year. Some of them will matriculate into the JDF, but the significant remainder will be available to the labour market to support technical fields that are also crying for support. The government understands the challenges that the economy faces, and we are putting in place the measures to ensure that growth continues in spite of those challenges.
Now, as it relates to the stock market, I listened very carefully to Greg’s both international and local analysis and clearly, I’m not an analyst, but I think that your analysis is spot on. We pay very close attention to what is happening in the United States and your assessment that we are probably entering a period where rates could be stabilized and trend downwards, I think it’s accurate and we have the same perspective here in Jamaica. But the concern for inflation and the damage that inflation could do here is for us of greater significance than I suspect for the United States so we will always be very cautious about inflation.
We are happy to see that our inflation rate is edging back into our zone, and we have done what is necessary to cushion prices, particularly in critical areas such as transportation, and we will continue to monitor and be ready to respond if we see any significant threatening optic in inflation.
Now, I’ve heard comments being made regarding the junior stock exchange and how important that is. I think it’s important to remind persons that former Minister of Finance Audley Shaw, could you say that he’s the father of this? It was a big, big proponent and pushed very much for it even when it was not considered to be wise to do it. It still remains our thinking, but we have to, as I said, make sure we balance everything very carefully. I know that we have already done some work on it, and I’m certain that the Minister of Finance is going to speak; I think he speaks tomorrow, and I believe he will have some words to say. I didn’t say what those words will be, but as I said, after so many years of operations and it’s shown good results, it could be a fillip for the stock market generally, and I think it’s something we have to consider very carefully.
I also think that the, the stock market can play a very important role in the development of our small businesses. Quite apart from the Junior Stock Exchange, but the level of support you give and coaching and mentorship you give to businesses, and I think it is in that area that greater exploration needs to take place as to how government can partner with the stock exchange to help with the development of small businesses, not just from the equity side of financing it but from the business development side. And I think Marlene, that is an area that I am very much open to discussions, certainly with the DBJ and yourself.
So, with those remarks, you have been the beneficiary of my abbreviated presentation this year. It is always a great pleasure to address this audience. It sets the tone and I know the market is in a little bit of depression right now but, as you have said Gregory, it is part of the business cycle, and the market will come out of it and the government stands ready to support in any way we can.
God bless you and thank you.