[OPINIONS]:::Brian Wynter applauds JDX

No. 64 Wednesday, March 10, 2010
By Robert Dalley, Esq.
The Minister of Finance and Public Service, Hon. Audley Shaw, appointed former executive director of the Financial Services Commission (F.S.C.), Mr. Brian Wynter, to the senior governmental position of Bank of Jamaica Governor in November of last year.

    He is a highly qualified financial analyst and has had a wide experience in banking for many years. He enjoys a broad respect across the financial and banking sectors respectively and had a most successful tenure during that period of time when he served as head of the F.S.C. and is a most capable, experience and suitable person to be heading the Central Bank at this point in time.
    On Wednesday, February 10, 2010 Mr. Wynter while speaking in his capacity as Central Bank Governor emphatically and vociferously articulated that the Bruce Golding-led administration's Jamaica Debt Exchange (J.D.X.) which has had a compliance rate of 97 percent is unambiguously one of the most successful debt exchange of government bonds at a reduced rate to have taken place in the world and re-stated the fact that immense savings will result by the implementation of the exchange programme.
    The J.DX officially re-places and re-issues some 350 Government of Jamaica local bonds with 24 brand new bonds specifically at a much smaller rate (12.25%) and contemporaneously at a much longer maturity date. It is a distinct fact that the J.D.X. will certainly save the government over J a$40 billion from interest rate payments and from an evaluation standpoint will definitely provide increased within the local financial and banking markets that will allow for higher trading across the local financial markets.
    Government's interest payments are due to decline from the current rate of 16.2 percent of Gross Domestic Product (G.D.P.) in this fiscal year to 9.7 percent of G.D.P. by the fiscal year of 2013/2014 based on government projections. And even more good news is the fact that the extent of maturity debt for government is projected to fall by a whopping 65 percent over the next three years. Therefore, that reduction in government's re-financing requirements will alleviate the congestion effect of the government debt and also the ascendant effect that this would have placed on domestic rates.
    The locally operated financial institutions in Jamaica got another round of commendations on their full support of the debt exchange programme from one of the government's senior technocrats in the person of Mrs. Pamela McLaren who is the senior director of the Debt Management Unit based in the finance and public service ministry. With regards to the J.D.X. she eloquently posited that the country's situation was even more remarkable because close to 97 percent of local bond holders have now signed on to the government programme. Well said, Mrs. Laren.
    B.O.J. Governor Wynter has stated that the Golding administration is currently carrying out the necessary policy reforms that will effectively reduce the government's voracious need for borrowing substantial loan funds and timely lowering the country's overall inflation rate. He further commented that other important fiscal reforms are being implemented by the government which, are extremely needed to expand the export sector especially within the current unfolding worldwide economic recession. He also stated that "we all know than an exporter friendly macro-economic environment assumes a low rate of inflation, relatively low interest rates and high levels of productivity underpinned by a stable social environment. "
    Wynter was absolutely correct when he astutely stated that the just concluded International Monetary Fund's loan agreement and programme will firmly playa critical, major and important role in facilitating and allowing an enlargement within the country's export sector.
    Based on the many comments and enunciations that I have heard from the Portia Simpson Miller led Opposition including from the party's Chair­man, Robert Pickersgill, Basil Waite, Peter Phil­lips among other spokespersons I really wonder if they understood the importance of the I.M.F. stand by loan agreement. They need to be told that that I.M.F. loan arrangement was a cardinal part of the government meeting the country's external obligations and ensuring that economic growth will be forthcoming immediately after the global economic crisis ends.
    The country's overall exports declined by 51.3 per cent last year 2009 primarily negatively impacted and based on the worldwide economic meltdown and simultaneously a tightening from demand on a global basis simply put. Further, our exports have fallen sharply while on the other hand the volume and cost of imports have increased with Jamaica having to operate a large merchandise trade deficit. We have to get local production expanding and consistently improving across the country and the government must put into place the necessary concession measures that will entice local investors to enlarge their businesses which will allow for more persons in the country to gain employment whenever these investors expand their businesses or start other businesses throughout the country. The government must as a matter of priority simplify the entire tax process so that business owners and entrepreneurs can be able to file their tax returns easily and less cumbersome that what obtains presently.
    The present tax return system for business owners, companies and self employed persons is much too lengthy and burdensome thus costing a large amount funds, time and, energy when compiling and filing the respective government income tax returns and those various fees that are currently charged by accountants and tax experts to assist with filing those returns are quite immense I might add. It is really imperative that the Finance Minister effectively reform the entire tax system as was promised by him sometime ago. There is supposed to be the consolidation of some of the government taxes into one single deducible tax namely the National Housing Trust, HEART, National Insurance Scheme.
    With regards to the lowering of the country's interest rates. Without a significant, reduction of the country's interest rates in line with those of our other trading partners the export sector would not at all be able to adequately take advantage of those plethora of opportunities that are available for investment and export to put it straight-forwardly. It is extremely necessary that Jamaica has in place interest rates that are closely in line with those of our large international trading partners because if that is not the case then our country will not be able to effectively compete and trade with them and that is the undisputable fact. My research informs me that the prime lending rates in Trinidad is currently set at 9.5 percent while in Barbados the figure is 9 percent. The interest rate here in this country is at 15 percent. It is coming down from a rate of 19.5 percent. Importantly also, there must be other noted industry reforms that must be carried out by the government to allow our country to have a growing, viable and meaningful export sector.
    Some of these pivotally include what is called trade empowerment and facilitation, a sharp reduction in the period of time that it takes to get shipments from Jamaican warehouses and factories to the ports, and to the foreign market, a consistent compliance with international manufacturing standards and policies, business development, professional competencies, trade innovation, creativity, promotion and marketing. All these issues have to be addressed and put into place to enable the country to have an efficient, modernized and competitive export sector which has much potential for growth and expansion: We can definitely double the amount of products that we are producing and exporting to countries overseas and time is running out for our country in this regard.
    Global trade is so dynamic and non-static that we cannot afford to be lagging behind as is the case presently thus causing the country to be losing billions of dollars each year for having a low and declining export rate. The government must take the lead in reforming and expanding the country's export sector. In fact over the past 15 years, Jamaica's export sector with regards to goods and services have grown at a yearly rate of 4.7 percent which is factually in some cases half of two of our non-oil regional competitors; countries such as the Dominica Republic an Costa Rica for example have duly expanded their country exports by 10 percent and seven respectively. Quite instructive isn't it? Jamaica needs to have consistent export sector growth rates of the in region of five to eight percent annually in order for the sector to have a positive impact on the economy.
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