financing development in jamaica a panoramic view
TRANSCRIPT
Financing Development in Jamaica A Panoramic View:
Opportunities, Challenges and New
Paradigms
Jide Lewis, CFA, FRM
1
Official External Sources of Development Financing
Official Sources of External Financing (Annual Profile)
-3.1
-4.9
-3.4
1.3
-1.2
-4.6
-0.1
-0.7 -0.4
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
CY2012 CY2013 CY2014
Per
cen
t o
f G
DP
Government loan flows Government Bond flows Official Grant Flows
INFLOWS (-)
OUTFLOWS (+)
Three main sources of official external financing [Loans, Bond and Grants] have played an integral role in Jamaica’s development agenda.
Loan flows, with the exception of 2014, have represented to the largest source of official financing.
Bond flows has re-emerged as a main source of financing in 2014
Official Sources of External Financing (Quarterly Profile)
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.02012:Q2 2012:Q3 2012:Q4 2013:Q1 2013:Q2 2013:Q3 2013:Q4 2014:Q1 2014:Q2
Per
Cen
t o
f G
DP
Govt. Portfolio Securities Govt. Loans Official Grant Flows
NET CAPITAL OUTFLOWS
CAPITAL INFLOWS
Bond flows, however, has exhibited much volatility in the aftermath of the global financial crisis. Loans flows and Grant flows from Multilateral Financial Institutions have been much more stable over the last two years.
Official Loan Flows by Multi-Lateral Financial Institution (MFIs)
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
20
08
:Q1
20
08
:Q3
20
09
:Q1
20
09
:Q3
20
10
:Q1
20
10
:Q3
20
11
:Q1
20
11
:Q3
20
12
:Q1
20
12
:Q3
20
13
:Q1
20
13
:Q3
20
14
:Q1
20
14
:Q3
% o
f G
DP
US$
Mill
ion
s
Other EU KFW
CDB OECF USAID
IDB IBRD Grants-to-GDP Ratio
Jamaica has partnered with a wide range of multi-lateral financial institutions since the height of the global financial crisis. Supporting liquidity when global capital markets where exhibiting low levels of liquidity.
These partners have included the IBRD, IDB and the CDB, among others.
Official Transfers\Grants
-
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
20
08
:Q1
20
08
:Q3
20
09
:Q1
20
09
:Q3
20
10
:Q1
20
10
:Q3
20
11
:Q1
20
11
:Q3
20
12
:Q1
20
12
:Q3
20
13
:Q1
20
13
:Q3
20
14
:Q1
20
14
:Q3
% o
f G
DP
US$
Mill
ion
s
Other EU KFW
CDB OECF USAID
IDB IBRD Grants-to-GDP Ratio
Though grant flows from MFIs have typically represented lower proportion relative to GDP. These flows have catalysed the developmental process via: a) Provision of Technical
Expertise b) Application of
International Benchmark standards
c) Accountability along key stages of project implementation from design to implementation.
Improving Access to Global Capital Markets…
Jamaica has increasingly focused on creating the necessary supporting policy and institutional environment to promote and enhance the effectiveness of development initiatives.
Global Bond Markets
0
2
4
6
8
10
12
14
No
v-0
8Fe
b-0
9M
ay-0
9A
ug-
09
No
v-0
9Fe
b-1
0M
ay-1
0A
ug-
10
No
v-1
0Fe
b-1
1M
ay-1
1A
ug-
11
No
v-1
1Fe
b-1
2M
ay-1
2A
ug-
12
No
v-1
2Fe
b-1
3M
ay-1
3A
ug-
13
No
v-1
3Fe
b-1
4M
ay-1
4A
ug-
14
No
v-1
4Fe
b-1
5
Pe
r ce
nt
(%)
EMBI GOJGB
0
100
200
300
400
500
600
No
v-0
8Fe
b-0
9M
ay-0
9A
ug-
09
No
v-0
9Fe
b-1
0M
ay-1
0A
ug-
10
No
v-1
0Fe
b-1
1M
ay-1
1A
ug-
11
No
v-1
1Fe
b-1
2M
ay-1
2A
ug-
12
No
v-1
2Fe
b-1
3M
ay-1
3A
ug-
13
No
v-1
3Fe
b-1
4M
ay-1
4A
ug-
14
No
v-1
4Fe
b-1
5
Bas
is P
oin
ts
GOJGB-EMBI Spread
These efforts have resulted in a notable narrowing of the spread between yields on GOJ Global Bonds and the Emerging Market Bond Index. Jamaica is one of twenty middle income countries (MIC) which has access to global capital markets.
Other External Sources of Development Financing
Other Sources of External Financing (Annual Profile)
3.7 3.3
-0.7
-2.8
-5.2 -5.0
-12 -13.7
-15.0
-13.0
-11.0
-9.0
-7.0
-5.0
-3.0
-1.0
1.0
3.0
CY2012 CY2013 CY2014
Per
cen
t o
f G
DP
Non-FDI Private Capital Flows/GDP FDI inflows/GDP Remittance Flows/GDP
INFLOWS (-)
OUTFLOWS (+)
Three other sources of external financing have been Remittances, Foreign Direct Investment and Private Capital Flows.
Other Sources of External Financing for Development
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
2012:Q4 2013:Q1 2013:Q2 2013:Q3 2013:Q4 2014:Q1 2014:Q2 2014:Q3 2014:Q4
Per
Cen
t o
f G
DP
FDI Inflows/GDP Non-FDI Private Capital Flows/GDP Remittance Flows/GDP
CAPITAL OUTFLOWS
CAPITAL INFLOWS
While Foreign Direct Investment and Remittance inflows have been stable and robust, Private Capital Flows, though improving, have been very volatile.
Other External Sources of Development Financing: Remittances
Remittances: Who are the recipients? In terms of other sources of income - 40 per cent of
recipients were employed full-time
- 11 per cent were self-employed
- 25 per cent where unemployed
- 13 per cent were not seeking a job
75% of Recipients are women
Modal Age: 25 – 40
Household Size: 4
Education:
85% have at least Secondary-level education 25% have Tertiary-level education
USD 222 per Month
680,000 Persons
Usage of Remittances for Frequent Recipients
14 per cent
9 per cent
6 per cent
7 per cent
19 per cent
Electronic Retail Payment Solutions for which authorizations were requested related to proposals to provide the following services using cards and mobile wallets: i. Balance Enquiries; ii. Bill Payments; iii. Loyalty Programmes; v. Person-to-Business Transfers; vi. Person-to-Person Transfers; and vii. Mobile wallet services.
Other External Sources of Development Financing: Foreign
Direct Investment
4.8
5.7
4.2
4.4
4.6
4.8
5.0
5.2
5.4
5.6
5.8
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
CY2013 CY2014
To
tal F
DI a
s a
Per
cen
t o
f G
DP
US
$ M
illio
ns
Agricultural/Manufacturing/Distribution DivestmentInformation Tech/Communication InfrastructureInsurance Minerals & ChemicalsMining OtherRetained Earnings TourismTOTAL
Annual Foreign Direct Investment by Economic Sector
China is playing an increasingly important role particularly in the development of infrastructure in Jamaica. Tourism investments particularly from Spain has also buoyed FDI inflows. There have also been ongoing investments in the areas of telecommunications, mining and agriculture and distribution.
• Making it easier to start a business : Simplified preregistration
formalities (publication, notarization, inspection, other requirements) • Cut or simplified post registration procedures (tax registration, social
security registration, licensing)
• Ease of getting electricity Improved regulation of connection processes and costs
• Jamaica made getting electricity less expensive by reducing the cost of external connection works.
• Jamaica made starting a business easier by consolidating forms, but also made it more time-consuming as a result of delays in the implementation of the electronic interface with different agencies.
Making “Doing Business” in Jamaica Easier
Domestic Sources of Private Sector Development Financing
Domestic Sources of Financing (Annual Profile)
-5.0
-4.5
-4.0
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
CY2012 CY2013 CY2014
Per
cen
t o
f G
DP
Domestic Loan Flows/GDP
INFLOWS (-)
The pace of domestic financing of loans to businesses and households has slowed in 2014 relative to both 2012 and 2013.
Credit Reporting Activity
The Panoramic View
12.0
3.1
2.8
0.2
-1.3
2.8
-3.7
-5 0 5 10 15
Remittance Inflows
Official Loans
Foreign Direct Investment
Official Grant Flows
Govt Bond Flows
Domestic Loans
Private Capital Flows
Per cent of GDP
13.8
3.4
5.1
0.4
4.6
1.0
0.7
0 2 4 6 8 10 12 14 16
Remittance Inflows
Official Loans
Foreign Direct Investment
Official Grant Flows
Govt Bond Flows
Domestic Loans
Private Capital Flows
Per cent of GDP
2012 2014