The Economic Growth Council, EGC, says Jamaica’s exchange rate regime is not credible.
In its 24-page report and recommendations, entitled “Call to Action”, the EGC says the one-way movement of the Jamaican dollar does not make the currency more flexible or enhance the country’s competitiveness.
It’s among several items laid out in the document published yesterday.
The Jamaican dollar has lost nearly 30-percent of its value since the country entered into the most recent agreement with the IMF in 2013.
The historical movement of the exchange rate – with very few exceptions – has been down, coming all the way from 1971, when the Jamaican dollar was actually stronger than the US, at $0.77 to the American.
And that’s the issue the Michael Lee Chin-chaired EGC has with the exchange rate.
It says it supports flexible exchange rates that are based on the competitiveness of the Jamaican economy in relation to the country’s trading partners.
However, the Council says exchange rates that seem to move only in one direction defy the definition of “flexible”.
As such, they say the credibility of the exchange rate regime needs to be enhanced.
It’s one of several fixes they’re recommending for the economy.
Another is debt for assets swaps, something already proposed by the Holness administration on the campaign trail.
The EGC says Jamaica has assets that can be sold, and the proceeds used to pay down debt.
It says this can reduce Jamaica’s overall debt burden by two to three percentage points in the medium term.
However, it says the divestment process needs to be more streamlined.
The EGC is critical of the current model, which it says relies on ad-hoc enterprise teams led by part-time chairpersons and staffed with non-dedicated resources.
As an an example, it cites the failed attempts to divest the Norman Manley International Airport.
It’s recommending that the government set up a single permanently-staffed enterprise team to handle multiple privatisations and public-private transactions.
In addition, the EGC says some $30-billion of assets currently held by the Urban Development Corporation, UDC, and the Factories Corporation of Jamaica, FCJ, can be identified for sale.
The Council says these two government Corporations own approximately $100-billion in assets, which are being under-utilized and not contributing to jobs.
They say selling some of these can speed up economic growth.