Update on financial matters from the Honourable Fayval Williams
CREDIT RATINGS
This morning, I am calling your attention to the fact that the credit ratings on Jamaica’s global bonds continue to move in a positive direction, with the latest being the international rating agency Fitch’s upgrade of the Government of Jamaica’s (GOJ) international debt to ‘B+’ from ‘B’ and revising the outlook to ‘Stable’ from ‘Positive’. The rating agency also upgraded the country ceiling to ‘BB-’ from ‘B’, meaning that strong local entities can be rated as high as ‘BB-’. This is excellent news. It means, for example, that a Jamaican company with strong diversified earnings can have a rating that is not constrained by Jamaica’s country rating. Benefits of this for the company are lower funding costs and access to a wider base of potential investors.
Taken together, this is Jamaica’s highest rating in over 10 years from Fitch. The Government of Jamaica welcomes the ratings upgrade and remains committed to the continuation of policies and programmes that enable a stable macroeconomic environment that facilitates the economic growth required for sustainable and inclusive development.
Fitch said the ratings are supported by Jamaica’s structural strengths, such as relatively high income per capita, and social indicators, policy consensus, and relatively strong institutional capacity. According to Fitch’s press release, positive performance indicators underpinning the upgrade in Jamaica’s credit rating include:
• The strong performance of tax revenues, increasing by 10.4 per cent (year on year);
• The declining path of Jamaica’s public debt/gross domestic product (GDP);
• The decrease in the Government’s interest burden to an estimated 6.8 per cent of GDP in financial year (FY) 2018/19 from 8.0 per cent recorded in FY2014/15;
• Reduction in the unemployment rate to an all-time low of 9.1 per cent in 2018 (annual average);
• Strong external liquidity;
• Structural indicators such as governance, human development per capita, income;
• Reforms to strengthen the macroeconomic institutional framework, including the establishment of a fiscal council; and
• Cross–party support for economic reforms. PUBLIC SECTOR
Internally within Government, the GOJ will be implementing some key projects over the next 18 months to improve the levels of efficiency and quality of service delivery in the public sector. Minister Clarke unveiled these on Thursday, February 7.
The projects, being coordinated by the Transformation Implementation Unit, are the introduction of shared corporate services, human resource management transformation, the continued rationalisation of public bodies, public-sector efficiency and ICT, and wage bill management.
Shared corporate services will begin in eight areas (human resource management, finance and accounts, procurement, asset management, IT services, internal audit, public relations and Communication and the centralisation of legal services under the Attorney General’s Department). Minister Clarke said that this will revolutionise the way the public sector works and the level of service that the Government provides.
Minister Clarke also announced that better use will be made of information and communication technology to re-engineer processes to achieve greater efficiency in how public services are delivered to citizens. This includes the roll-out of a single IT network to provide connectivity across ministries, departments and agencies. This will enable integrated information sharing while reducing the cost of providing ICT services. This project will also upgrade and consolidate the GOJ’s data centres.
Across the public bodies, twenty public bodies have been rationalised over the last two-year period through mergers, closures, divestments and integration into parent ministries.
You are well aware that there are approximately 190 public bodies. This creates an administrative and governance challenge. We are reducing the number of public bodies through merging entities that are similar in function, closing entities that have outlived their useful lives, divesting entities, and, very importantly, integrating entities back into the parent ministries where it is no longer necessary to have a separate body set up by statute to deliver the function. Importantly, the function does not go away. Instead, the way in which the function is delivered changes.
Just to give you a comprehensive list of the entities merged:
The Jamaica Foundation for Lifelong Learning, National Youth Service, the Apprenticeship Board, and the HEART Trust/NTA;
The Office of the Children’s Registry and the Child Development Agency;
The National Land Agency and the Land Administration and Management Programme.
Entities such as Kingston Waterfront Hotel, Portmore Commercial Development Limited, Port Authority Management Services, and the Road Maintenance Fund have been closed.
The functions of the Board of Supervision have been integrated into the Ministry of Local Government and Community Development, and the functions of the National Family Planning Board and the National Council on Drug Abuse have been integrated into the Ministry of Health.
Having had these successes with little, if any, disruption to the delivery of services, there is now an accelerated programme in place for public bodies, and action will be taken on 18 more public bodies by September of this year. These include the closure of Montego Bay Beach Ltd, the merger of the Fair Trading Commission and the Consumer Affairs Commission, and the integration of the Legal Aid Council into the Ministry of Justice.
Minister Clarke added that the wage bill management project seeks to address the current cumbersome compensation structure and the attainment and maintenance of a wage bill-to-GDP ratio of nine per cent. Currently, there are 325 separate salary scales and classification levels in central government and over 175 allowances. Already, steps have been taken, with the Office of the Services Commissions to develop and implement rules to regulate the rehiring of retired public officers in the public sector. Over the next 18 months, a compensation policy, philosophy and strategy around effective spend on public-sector compensation is also to be delivered.