The baseline is as smile-inducing, warm and welcoming as the topic of the song is dry and esoteric. The 30-second reggae song, which features female band Adazeh and dreadlocked singer “Ice Man”, praises low inflation rates as foundation of the economy. The video is part of the Jamaican government’s effort to sell low inflation as just one of a slate of tools it is using to fuel what many are calling an unprecedented and historic economic turnaround.
The Bank of Jamaica produced this and several other videos, which have gone viral with hundreds of thousands of views from around the world, as part of a campaign appearing on social media. In true Jamaican fashion, they tap into the country’s deep-rooted love of music.
Just over seven years ago, Jamaica’s debt was close to 150 per cent of its GDP, unemployment was over 15 per cent, and growth hovered just under one per cent annually.
Now, the debt-to-GDP ratio is set to fall below 100 per cent in this year’s budget, more people are employed at any time in the country’s history (the unemployment rate sits at eight per cent), and there have been 18 consecutive quarters of growth. Jamaica’s stock exchange was also named the fastest growing by Bloomberg in 2018, with the value of stocks jumping 300 per cent and the overall stock exchange rising by 29 per cent, the best among 94 countries.
“In the context of Jamaica’s history, superlatives are appropriate,” says Nigel Clarke, Jamaica’s Minister of Finance and Public Service. “You have to understand that Jamaica had four decades of macro instability and average growth rates of 0.9 per cent. Against that backdrop, and an internally resourced recovery that has reduced debt by half of GDP, in a relatively short period of time is without precedent. It is, in my view a remarkable achievement of the Jamaican people.”
And while there are many signs of the turnaround, the fruits of the achievement are still slow in trickling down to many Jamaicans. This is why the Bank of Jamaica has embarked on what has become an internationally acclaimed campaign to educate citizens about the recovery and how it has come to be.
In one video, reggae artist Tarrus Riley sings about low inflation in his signature throaty vocals.
Riley is praising the Bank’s pursuit of low inflation (it has been as high as 22 per cent in the past) as just one of several tools aimed at keeping the economy on its upward path.
“The idea is to communicate in the best way possible, and in Jamaica, nothing aids communication as much as music,” Clarke told AP in an interview in his office overlooking Kingston’s harbor. “Music aids in advocacy, and the same is true for complex monetary policy.”
Clarke and the Central Bank of Jamaica under Governor Brian Wynter, under Prime Minister Andrew Holness, and Dr. Peter Phillips of the previous administration, the Jamaica Labour Party, have been instrumental in steering the country out of deep financial hardship, including the pending completion of an agreement with the International Monetary Fund, which had some of the toughest conditions in the organization’s history.
And while it is by many accounts a remarkable achievement, the story of low inflation still needs to be sold to the Jamaican people. Dr. Sonjah Stanley Niaah, Director of the Institute of Caribbean Studies at the University of the West Indies, says the Bank of Jamaica’s use of music is a natural way to reach the population.
“It’s a no brainer, using culture to educate and simultaneously entertain or ‘edutain’. In this case we are talking about a context in which music is wired in the people’s DNA,” Dr. Niaah says. “The real test is in the measurement of the impact of this advertisement campaign on the youth of Jamaica in years to come.”
And while Peter Blair Henry, the Jamaican-born Dean Emeritus at New York University’s Leonard N. Stern School of Business and a former advisor to President Barack Obama, concurs that the Bank’s education campaign is a smart move, and praises the Jamaican legislators for adhering to some tough IMF conditions over successive administrations. “It was the first time in history that happened, to have consistency in policy. Good economic policy is apolitical and should be bipartisan, and in this case, what was good policy for the country prevailed over political interests,” he said. This is all the more remarkable in a country in which elections were sometimes bloody and murderous.
Damien King, a professor at the University of the West Indies and executive director of the Caribbean Policy Research Institute, is not shy to use superlatives to describe the situation. “It is, at this stage, potentially the greatest story ever told.” According to his own ‘back-of-the-napkin’ calculation, Jamaica until recently had the worst-performing economy in the world, despite a raft of advantages like sea ports, proximity to the United States, rich natural resources, no history of major ethnic conflict, an English-speaking population, good infrastructure and a healthy democracy. Even with these advantages, Jamaica was plagued with low productivity, long-term stagnation and crippling debt. As a result, since the mid-1970s, Jamaica has undergone 16 arrangements with the IMF, as well as other international organizations such as the World Bank and the Inter-American Development Bank, to which Jamaica is still indebted to a tune of around to US $6 billion.
However, the last Stand-By Arrangement with the IMF is set to finish by the end of 2019.
“Jamaica ended up with an unsustainable level of debt where a large majority of budgetary revenues would be needed to be sequestered for debt services, which is unsustainable because it affects your ability to invest in your social and physical infrastructure and provide services to your people,” says Clarke.
One of the pillars of the economic recovery, Clarke says, hence the video, was moving away from the exchange rate as a primary tool of monetary policy towards the pursuit of an inflation objective of between four and six per cent. Other measures, some of them austere and punitive to Jamaicans, were a wage freeze, a target of a 7.5 per cent surplus, reduced spending, and policies that render more transparency to monetary policy, as well as making the Central Bank more independent and less vulnerable to political will, especially at election time.
“Jamaica came to a place where it had no option but to pursue painful but necessary reforms,” Clarke says. “And there was anger in the society at the decisions that were made over a long period of time that would have brought us to that point, and in an unprecedented way, we had a level of citizen engagement and civil society participation that demanded a greater level of transparency, a greater level of accountability participation in return for enduring the pain and sacrifice that would be required to restore economic viability.”
And while things are looking up, there is still much work to be done.
The government will likely not meet its “5 in 4” target (achieving five per cent growth in four years, as promised by the Jamaica Labour Party in the last election). The country is also aiming, through its Vision 2030 project, to reach developed nation status by then.
Economist Dennis Jones says there are obstacles that must be removed in order to meet those targets. “We still appear to be languishing in the one to two per cent range, and that’s not a rate that is going to do a lot for us going forward as a society,” Jones says, citing crime and aging infrastructure as the obstacles. A recent report found that Jamaica’s GDP could get a 5.4 per cent boost if the country’s homicide rate of 47 per 100,000 fell to levels in neighboring countries such as Costa Rica.
According to the most recent report from the United Nations Development Program, almost one in five Jamaicans live in poverty and gross national income is $8,350, amongst the bottom half of the world’s nations.
Corruption also remains a major problem, with Transparency International ranking Jamaica as being perceived as the 70th most corrupt nation out of 180. The public service suffers from severe inefficiency, infrastructure is degrading (although the government is currently in the middle of major capital improvements the road network), there is no reliable, long-term solution to providing fresh water to citizens, crime remains rampant (there were over 1,600 murders in 2017) and youth lack skills for well-paying jobs. The minimum wage, while recently raised, still sits at just over US$50 per week for a 40-hour week.
Mark Golding, an opposition Member of Parliament and shadow critic for finance, says that while Jamaica’s economic turnaround cannot be denied, there are still areas that need improvement. “It is a very significant turnaround,” he says, adding that his party did all the heavy lifting of sticking to the budgetary surplus in the first years of the most recent IMF program. “The levels of growth are not where we would like to see them,” he adds. “In order to get them up, you need to focus more on how the private sector interacts with the public sector. It needs to be more efficient. The government has dropped the ball quite badly in that area.”
Another area that needs examination, says Dr. Claire Nelson, a futurist, engineer and founder of the Washington, D.C.-based think tank, is the inclusion of all Jamaicans in the turnaround. “How do you make this prosperity more inclusive,” she says, adding that the government must pay more attention to small farmers, and improving energy efficiency and road and water infrastructure.
Garcia Madden is 49 and works in the beauty industry. She says she has not seen much of a difference in her income. “I wouldn’t say things are improving. I do not have more take-home pay and bills are going up.”
In the inner-city communities, this is a common complaint. Luke-George Cooke, chairman of the Downtown Development Committee, works in Trench Town, and is skeptical of the claims of a turnaround. “I realize that sometimes these things are superficial. A woman should not have to stab a woman over a $2 eyelash. And in downtown Kingston, more and more you see people struggling. I don’t see in the inner-city community where people are upgrading their homes.”
As Clarke readily admits, there is still a lot of work to be done, but the signs that the country has turned a corner are rampant. He points to a US$2 billion contingency fund for when natural disasters hit. “We’ve never been able to do that before,” he says, adding that even with a pending election in two years, he doubts the political will to maintain this fiscal discipline will wane. “Jamaica has come too far. We have paid too heavy a price. The economic gains of our sacrifice and our fidelity to reform effort are too manifestly obvious for us to engage in policy reversal. The gains are unambiguous.”
Another sign of the recovery is evident in Jamaica’s downtown core. For almost 50 years, it has been a place many Jamaicans just don’t go and tourists are warned against, especially at night. The streets are gouged with cavernous potholes, buildings are hollowed out and occupied by squatters, rubbish is strewn everywhere; there are few streetlights, aggressive panhandlers, and of course, rampant crime. But the announcement of the transformation of a derelict building to a Hilton Hotel overlooking the waterfront is heralding a resurgence of both downtown and Jamaica as a whole, in what observers are calling a historic and unprecedented economic turnaround.
In early June, Jamaican investment firm PanJam announced the transformation of the former Oceana Hotel to a hotel under the Hilton banner. The now vacant building will be redeveloped as a 12-storey, 168-room hotel.
“This is a massive, game-changer for Jamaica,” says Delano Seiveright, a strategist in the Ministry of Tourism. “As it stands now, there’s no hotel for downtown Jamaica, and to have a major brand establish itself here speaks to the fact that things are definitely turning around for Jamaica.” The downtown core, while home to businesses and government buildings, became run down after the Jamaican economy took a nose-dive in the 1970s, Seiveright says. “It’s been that way for decades, but in the last two to five years, we are seeing renewed confidence, which is really the result of macroeconomic stability in the country. People are happy about the direction we are going in, and the buoyancy that follows.”