Chris Bicknell, Contributor
THERE ARE no longer the 'patrons in waiting' who at one time provided safety nets to rescue countries in distress. This is one of the stark realities of Globalisation. Today, each country is on its own and must be able to fend for itself. This reality forces any small under-capitalised country (like Jamaica) that wants to develop and grow, to put in place and carry out sound economic programmes that are consistent with the requirements of dispassionate investors, who measure a country solely on its trustworthiness and its economic performance and plans.
GLOBAL CAPITAL SYSTEM
Therefore, for our country to survive in today's world, its leaders must grasp the rules and requirements of the global capital system. They must be able to maintain our country's presence, respect and trustworthiness in the world financial markets, by presenting themselves on the global stage and displaying our country's achievements, plans and creditworthiness.
The success of our US$300 million bond issue last week at nine per cent per annum, which is the lowest interest rate ever achieved by Jamaica in the international capital markets, is a new milestone of Jamaica's progress in establishing itself as a destination for investment capital in the global economy. Against the backdrop of increasing interest rates in the United States, the reduced interest rate priced for this bond reflects the lowering of risk that the world attaches to Jamaica, demonstrating that Jamaica has attained the trust of the world and the world markets.
This Jamaican bond was issued in a week in which the money market investors were jittery, as bonds issued by General Motors and Ford Motor Company were downgraded to junk status. The purchase of a country's bonds is an investment by numerous hard-nosed private institutions and individuals, not a soft loan by a multilateral development institution or a 'friendly' nation state. It is, therefore, very important for Jamaica that our bond was taken up largely by foreign subscribers, rather than by local investors. The bond was launched and closed within 24 hours last week. The quick closure of the issue was due to the very large demand for the investment opportunity, which resulted in substantial over subscription of the offer, with Jamaica accepting US$300 million (having originally targeted US$200 million), amid subscriptions of nearly US$900 million.
WORLD INVESTORS
The significant success of this bond indicates that the view from abroad of the future of Jamaica is positive. It shows that Jamaica has clearly established itself on the radar of world investors, who are 'buying into' our country's economic achievements and plans. Greater confidence is being placed on our economic policies. The lower interest rate that Jamaica will be paying for this latest bond augers well for future borrowing by the Government. The proceeds of this bond will also have the effect of replacing higher priced borrowings, which will in turn have a compounding positive impact on the budget.
EMERGING CONFIDENCE
Having attained this enviable level of acceptance from the world markets, it is imperative that the benefits of the emerging confidence, both from outside and inside our country, be felt by all levels of society. We must now turn our focus within, and place our emphasis of encouraging entrepreneurship, and stimulating expansion of small business by embarking on a programme to generate small business activity. This is essential for Jamaica to enter in the next phase of economic development and achieve meaningful growth.
In developed countries, 50 per cent of employment comes from small business operators. Jamaica must now urgently attend to this sector. Each part of society with resources must play its role in doing so, be it Government, banks or entrepreneurs. If adequate attention and resources are focused in stimulating small business operators, the results will have the greatest impact on the less
fortunate and provide an economic base for a sustained solution to the social ills that are now plaguing the society.
