Williams

WESTERN BUREAU:

Banker Christopher Williams is warning that there is an urgent need for fiscal responsibility among Jamaicans, particularly those who are living above their means during the current financial crisis.

"The fact is that it has been decades since we achieved a balanced budget and no country ... no business ... no individual ... will be successful over the long run unless they simply spend less than they earn," he cautioned, while addressing western Jamaica's business community at the Montego Bay Chamber of Commerce and Industry's annual banquet at the Ritz-Carlton Rose Hall last Saturday night.

Sounding a clear and deafening call for action, the NCB Capital Markets managing director said the widening of access to development financing, a strategic drive towards economic growth and prudent management of finances, was critical as the global meltdown took shape.

No access to markets

"The current situation of falling revenues and no access to international capital markets will force us to take a more disciplined approach to our finances," he alerted the large gathering, reminding them that Jamaica has had a poor record of balancing its fiscal accounts, missing out on the upside of the last phase of global expansion.

Terming his observations as the raw truth, the banker did not mince his words, reiteratingwhat many have said that the country could not have been successful borrowing its way out of fiscal indiscipline.

He, however, feels the crisis represents a unique opportunity for the Government to fast-track and implement much-needed policy reforms to position the country for the next phase of the global economic boom.

"This includes the harmonisation of fiscal policy and the implementation of administrative reforms with respect to taxation policy, procurement policies, reducing bureaucracy and other barriers to business and investment."

According to him, realistically, the country will need to select two to three industries, namely tourism and alternative energy that can propel growth and get the GDP moving upwards.

In the case of development financing, although the NCB Capital Markets head is confident that the Development Bank of Jamaica (DBJ) will continue to play a pivotal role in supporting the growth of the economy, he feels that window will need some fine-tuning.

"The DBJ will offer entrepreneurs the ability to finance their businesses at internationally competitive market rates; however, it has been my experience during my 15 years in banking that the DBJ window will need some tweaking," he said.

He warned that the DBJ would have to look at refinancing as many business owners' access to existing commercial banking facilities will now be overpriced at much higher interest rates, driving these businesses to a halt, while several business owners will not be able to access the attractive development financing window as they lack the required collateral to securitise the loans.

Expansion

"The development financing window will have to be expanded to include equity or quasi-equity financing (a category of debt that has flexible repayment options or unsecured)," he cautioned, adding that in order to get or keep these businesses moving, they will have to be provided an avenue to raise equity.

janet.silvera@gleanerjm.com