The People’s National Party (PNP) headed by Portia Simpson Miller has resoundingly won the general election and now has a two-thirds majority in parliament. The most pressing matter on its agenda will be the rehabilitation of the economy and coming to an accommodation with the IMF.

For some time now successive administrations have exhibited both a lack of will and discipline to implement what is needed to grow the economy and jump-start it from the torpor that has enveloped it for decades. Therefore the strictures imposed by the IMF may well be the panacea needed for this time. Sometimes an outside party has a clearer view of what is needed to be done than those who are closer at hand.

For the first half of this year the IMF country representative, Gene Leon remained noncommittal and not too outspoken on Jamaica’s position with the IMF taking, a diplomatic stance. As Jamaica continued not to submit to successive tests and the country’s economic and fiscal position became a growing cause for concern he became increasingly more declarative, all the while being the voice of reason. He has noted the country’s fiscal distortions, low productivity, propensity for granting waivers and incentives, the challenging business environment and a crime rate that has cost the country between 5 and 7 per cent of GDP.

There has been talk that the present Stand-By Agreement for US$1.27 billion over a 27-month period can be renegotiated and less stringent conditions arrived at. Leon has steadfastly made it clear that Jamaica must complete the present agreement which concludes in May 2012. He has remained unwavering in holding Jamaica to account and this above all else makes him Caribbean Business Report’s Personality for 2011.

Before becoming the Senior Resident Representative for the IMF in Jamaica, he was a Deputy Division Chief in the Middle East and Central Asia Department at the IMF which undertakes economic surveillance on the economies of the Gulf Cooperation Council. He has been at the IMF since 1996. Prior to joining the Fund, he was the Director of the Research Department at the Central Bank of Barbados and taught at the Universities of Southampton and Kent in England and the State University of New York in the United States. He has a PhD in Economics from the University of Southampton, England. His research interests are in applied econometrics and finance. Leon brings experience and intellectual rigour to the task at hand.

He has not been draconian or heavy-handed, neither has he exhibited any political partisanship, but rather has remained sanguine yet firm on what Jamaica is committed to. In other words he has played a leading role in keeping Jamaica honest.

He remains adamant that Jamaica must act quickly to implement much-needed tax and pension reforms. Addressing a Jamaicans United for Sustainable Development summit at the Spanish Court Hotel in Kingston last October, Leon said: ” The structural reforms that we mapped out, that we are saying needed to be done, and done within the window of opportunity, that window is closing and the reforms are not taking place or at least it’s being delayed.”

Jamaica has exhibited a penchant for waivers and tax incentives to certain businesses to the detriment of revenue collection for the public good. Speaking on this issue, Leon declared: ” Experience shows that in general, the provision of tax incentives is not a long-term growth strategy. The design, cost-benefit calculus, prioritisation among recipient sectors, opportunity costs to non-recipients, appropriate monitoring are not always easy to calibrate or implement.” He pointed to a study which revealed that there were more than 200,000 incentives, covering a wide range of business activities.

At last year’s Jamaica Stock Exchange (JSE) Investments and Capital Markets Conference held at the Jamaica Pegasus Hotel, Leon noted: “A 2007 study by the Inter-American Development Bank estimates that 40 per cent of economic activity in the country is unregistered and untaxed, and that tax exemptions and incentives have eroded half the tax base. Tackling growth today requires not only a comprehensive effort but one capable of addressing some shorter-run gains without compromising sustainability.”

Leon is also aware that The World Bank’s Doing Business Report for 2011 ranks Jamaica 81 out of 183 countries for doing business, 173 with respect to paying taxes, 127 in enforcing contracts, 109 in registering property, 100 in trading across borders and 84 in getting credit. Jamaica is also ranked 87 out of 178 countries on the 2010 Corruption Perception Index, which measures the perceived level of public sector corruption.

He is also keen to see reform of pension fund regulations. Speaking at the Caribbean Association of Pension Supervisors in May of last year he said, ” Improving governance is by no means an easy task for pension funds or their regulators. However, the business of pensions is too important to the security of a nation for it not to be a priority. There is, in essence, a symbiotic relationship between pension-fund investment and capital-market development. In the current environment, there may be the temptation, even the necessity, to take on higher risk in an attempt to increase returns.

“Reform of pension fund regulations to make them more counter-cyclical can engender long-term viability, stability and security of member benefits. At the same time, these reforms help broaden the regulatory perimeter of the financial sector. In fact, a recent survey estimates that the good versus bad governance differential can account for one to two per cent of additional return per annum.”

A vexing issue bedevilling Jamaican governments is the spiralling public-sector wage bill which skews the budget. The previous administration opted to increase it further by offering the carrot of a 7-per cent pay rise with no clear idea how to fund this move. This came against the background of Jamaica committing to lowering the public-sector wage bill from 11.5 per cent of GDP to 9 per cent of GDP by March 201, under the Stand-By Agreement. Leon has stressed that a wage freeze which should run until March of this year was an important component of the agreement and should be adhered to if Jamaica is to meet that 9 per cent target.

Throughout it all Leon continues to make it clear, despite the many challenges faced by Jamaica, that the IMF wants to work with the country to arrive at a conclusion that sees fiscal and economic stability. It does not want to impose stringent targets that sees Jamaica undergo hardships and forced to imbibe ” bitter medicine”.

” We still continue to discuss with the Government because the idea is not to say to the Board , we don’t have an agreement. But we want to be able to work as a partner and say we don’t think that set of policies will get you there.

“What we can say is that the IMF went into the programme with a view to assisting the Government and the people of Jamaica on addressing the problems confronting the country as of January/ February 2010, and so consequently we will still be willing and able to engage and assist, if asked,” said Leon.

There are many who argue that the agreement with the IMF has put the country in a straight jacket and should be renegotiated. In fact the economy grew by 2 per cent last quarter without the help of the IMF. Some even say that we have not drawn down on these funds for months and that the country hasn’t collapsed, so why should we be beholden to the IMF when cheap funds can be sourced from China and Venezuela?

In regard to Leon’s view that the present deal cannot be renegotiated, one commentator asserted, ” He’s bluffing, all agreements in the world, even among crooks, are subject to renegotiation. If the IMF is a civilised group then one would expect discussions on the way forward.”

Nevertheless it holds true that Jamaica needs to be held to account and to ensure it follows agreed terms regardless of the difficulties encountered if it is to come out of its present predicament. The man who has held firm to the task at hand last year was Gene Leon.

As Financial Secretary Dr. Wesley Hughes pointed out in September, without the agreement, Jamaica would return to a sliding dollar, high interest rates and high inflation. Without the IMF, Jamaica would have great difficulty getting funds from other multi-lateral lending agencies. The IMF agreement is not simply a loan arrangement but a partnership that aims to see the implementation of structural adjustments intended to place the Jamaican economy on a sound footing. In this regard Gene Leon has not wavered.