Just last week Bloomberg.com published a piece highlighting credible performance from the Jamaica Stock Exchange, as it outperformed all other stock markets across the globe (It’s Jammin’: Jamaica’s Tiny Stock Market Conquers World in 2015). I read the article and imagined the Minister of Finance and Planning, Dr. the Honourable Peter Phillips, MP, celebrating over his drink of choice for a second week in a row, having just the week before received a passing grade from the International Monetary Fund (IMF) following the 10th review under the four year Extended Fund Facility.
It dawned on me that Dr. Phillips has had what many would call a successful year!
(Courtesy of JIS http://jis.gov.jm/ministers/peter-phillips/
- Pass IMF tests, check
- Pass new legislation to project optimism & accountability, check
- Settle (most) public sector wage issues, check
- Improve on Word Bank’s ‘Doing Business’ index, check
- Improve international credit rating, check
- Attract increased new FDI from the above, check
- Pass off PR to the a widely accepted Economic Programme Oversight Committee, check
- Lend ministerial performance traction to support political party, check
The list reads well as elements of a ministerial resume. True success however, must be marked against deliberate follow-through actions geared at and which result in, wide reaching benefits for Jamaicans. I’ll use items 2 & 6 for emphasis.
Dr. Phillips will have as one of his achievements for this year, the passing of a new Banking Services Act, which should see the establishment of a ‘supervisory committee’ whose responsibility it will be to establish a code of conduct for institutions in the sector. The output of this committee will determine for me whether Dr. Phillips has been successful with the intention of this particular legislation.
One of my greatest peeves over the past few years has been what appears to be a red carpet laid out for financial institutions in Jamaica. I raised some issues in a previous blog about the lack of service standards in banking Guaranteed Standards for the Banking Sector?
To my mind, successive governments and governors of the BoJ, have facilitated an environment that has allowed financial institutions to become mega players in the country’s construct. As at July 2015 the government’s domestic debt was $857.4 billion of total debt of just over $2 trillion. Does a government lose its authority to represent the best interests of the people because of this kind if obligation? No! The financials of leading financial institutions will show that their operations are heavily dependent on government bonds and retail and commercial products; that the performances of their investment portfolios are not significantly impressive; that their super profits are not possible without our country’s debt and our individual and commercial income and debt.
I anticipate the projection of this in the the release of the code of conduct to be prepared by the ‘supervisory committee’. If well done, this could be a game changer for consumers and a ‘true’ success item for Dr. Phillips.
The other matter of interest under Dr. Phillips’ portfolio concerns credit rating. Both Moody’s and Standard & Poor, international rating agencies, have upgraded Jamaica’s credit rating during the 2015 period. Of worthy note, at the time of the last upgrades mid year, it had not been a year since the previous ratings, i.e. Jamaica benefited from multiple rating movements within a one year period.
Now, there are three active credit bureaus in Jamaica, consider them the Standards & Poor and Moody’s for individuals and corporations. A good credit rating opens a world of possibilities for a country, these rating agencies know this, thus when there is improved performance or evidence of improved fiscal management, the rating is swiftly adjusted. Comparably, how are the fairly newly installed local credit bureaus handling ‘changes’ and ‘movements’ with respect to consumers’ data and resulting ratings? Are the providers of information acting in accordance with the Bank of Jamaica’s stipulations? Are consumers across the board benefiting from these institutions as initially imagined?
While Dr. Phillips could get a ticky for improving the country’s credit rating, i’ll quickly uncheck said box as I believe on the matter of credit rating in a local context, the focus has been primarily on facilitating the build out of the bureaus and assisting financial and other institutions to manage risk, leaving by the wayside,adequate administrative guarantees to ensure a user-friendly, timely, useful and accurate credit reporting system for consumers. (This matter will require its own post.)
There is much work for Dr. Phillips and his team (or whomever else may occupy the seat following the 2016 elections) to do to ensure that country wins translate to individual impact. With 2016 just around the corner, the two issues raised herein, have the ability to make or break the prospects of the new year for the working and middle classes. I anticipate that the issues will be aptly consulted on to arrive at solutions that balance the interests of financial institutions, individuals and commercial interests.
C. E. Clarke for Help Mi Consulting (c) 2015