R E S I L I E N C E : B U I L D I N G B E T T E R Dr. Justin Ram December 8, 2017
AGENDA 01 Why we are vulnerable: Regional Challenges 02 Cost of Natural Disasters 03 Resilience Building: Stepping back to build better 04 Not just rhetoric: It s all about Implementation (NWW)
Regional Challenges Macroeconomic Low growth (average 1.1 % over a decade) High debt (Regional average 77% of GDP) Low commodity prices and declining reserves Limited trade markets Poor Human Development High poverty (43.7%) and youth unemployment (18-47%) Poor education outcomes, skills mismatch and brain drain High crime and citizen insecurity Low Productivity & Competitiveness Jamaica is the 70 th country in the 2018 WB Ease of Doing Business highest BMC Large infrastructure gaps Weak governance Inefficient and costly transport links and high energy costs Population decline Lack of economies of scale Environmental Threats High annual natural disaster costs (on average ~2% of GDP) Low insurance payouts Insufficient building codes Poor climate change adaptation tools
Regional debt levels are unsustainably high BAR JAM ANT BZE DOM SVG GRE BAH SLU SKN TT SUR GUY ANG HAI Government Debt/GDP (%) 2015 2016 Change in % 140.4 145.3 + 4.9 124.8 120.3-4.5 99.1 93.6-5.5 81.7 90.4 + 8.7 85.5 87.7 + 2.2 79.3 85.0 + 5.7 91.7 83.4-8.3 66.9 69.3 + 2.4 65.4 66.4 + 1.0 70.6 65.6-5.0 50.0 56.6 + 6.6 43.5 55.5 + 12.0 48.3 49.6 + 1.3 24.6 44.3 + 19.7 30.1 33.6 + 3.5
Regional Rankings World Bank Doing Business Reports 2016-2018 Best Performer: Jamaica(70 th ) 34 50 119 positive reforms (2016-2018) Most Reforms: Jamaica(11) 24 11 negative reforms (2016-2018) Source: World Bank
National Poverty Levels, % of population Latest year available Haiti (2012) Suriname (2012) Belize (2009) Grenada (2008) Guyana (2006) St Vincent and the Grenadines (2008) St. Lucia (2005) BMC poverty levels are high, Dominica (2009) 28.8 ranging St. Kitts (2009) 23.7 between 2% and 58.5% British Virgin Islands (2002) Turks and Caicos (2012) Jamaica (2012) Barbados (2010) Antigua & Barbuda (2007) Nevis (2009) Trinidad and Tobago (2005) Bahamas (2001) Anguilla (2009) Cayman Islands (2007) 9.3 5.8 2.0 22.0 21.6 20.0 19.0 18.3 15.9 15.5 47.2 41.3 37.7 36.1 30.2 28.8 58.5
NORTHERN AMERICA 1950 >175 million (7%) 2017 361 million (5%) 2100 499 million (4%) ASIA 2017 4.5 billion (60%) 2100 4.8 billion (43%) EUROPE 1950 >500 million (20%) 2017 742 million (10%) 2100 653 million (6%) Global population evolution is helping to change world trade patterns Source: Financial Times; UN Dept. of Economic and Social Affairs LAC 2017 646 million (9%) 2100 712 million (6%) AFRICA 2017 1.3 billion (17%) 2100 4.5 billion (40%) 2100: 2017: UN 1950: Projected World World World Population Population = 7.6 = 2.5 billion billion > 11.2 billion Oceania 2017 41 million (0.5%) 2100 72 million (0.6%)
1200 Indexed Estimated/Predicted Population Base = 1950 Expected pop. in 2100 Change from 2015-2100 1000 TCI, 1040 BEL, 997 52,000 688,000 +53% +92% 800 Migration and declining fertility will contribute to a slowdown of Caribbean population growth 600 400 200 0 1950 2015 2100 BAH, 592 BVI, 500 HAI, 399 ANG, 260 TNT, 152 GUY, 144 JAM, 102 GRE, 91 MON, 36 468,000 35,000 12.8M 13,000 963,000 588,000 1.4M 70,000 5,000 +21% +17% +20% -13% -28% -24% -50% -35% 0% Source: UN Dept. of Economic and Social Affairs Grenada and Montserrat will have lower populations than in 1950
AGENDA 01 Why we are vulnerable: Regional Challenges 02 Cost of Natural Disasters 03 Resilience Building: Stepping back to build better 04 Not just rhetoric: It s all about Implementation (NWW)
Economic and Fiscal Impact of Natural Disasters Disasters have crippled economies $52 billion Total damages to the region from 148 disasters (1950 2014) Higher fiscal deficits and public debt ratios Decline in key industries Larger trade deficits Population migration
Damages to GDP 4.5x 6x Small developing states are disproportionately vulnerable to natural disasters Source: IMF, 2016 Larger States 0.4% Small States 2% Caribbean 2.4% Disaster Frequency* Larger States (0.2) 2x 7x Small States (0.4) Caribbean (1.4) * Average annual disasters per 1000 km sq.
The economic costs of natural disasters have been significant Economic Costs of Storms in the region 1989 Hugo 434% of Montserrat s GDP 2004 Ivan 200% of Grenada s GDP 2017 Irma and Maria Estimates 2015 Erika 96% of Dominica s GDP Antigua & Barbuda: ~10% of GDP and 95% of the structures destroyed in Barbuda 225% of Dominica s GDP OT s: significant loss of life and 90% damage to key infrastructure
AGENDA 01 Why we are vulnerable: Regional Challenges 02 Cost of Natural Disasters 03 Resilience Building: Stepping back to build better 04 Not just rhetoric: It s all about Implementation (NWW)
Stepping back in order to jump better Macroeconomic Economic growth and diversification Strong/ resilient financial sector Productivity & Competitiveness Private sector-led growth Opening new trade markets Caribbean Blueprint: A vision for our resilient economies, society & environment Fiscal rules, e.g., max debt/gdp Human Development Targeted social interventions: Good quality education for all Workforce skills training based on employers needs Conditional cash transfers to the most vulnerable Sustainable Society Regional payments facility (Fintech) First class and costeffective infrastructure Environmental Preparedness Strict building code compliance CCRIF, indemnity insurance, resiliency funds Environmental tools Climate change adaptation tools Regional Integration Gender Equality
Resilience involves budgeting for disaster before it occurs EX-ANTE BUDGETING the practice of recognizing the cost of public policy for disaster relief and recovery before a loss event - OECD If Governments: Adopted effective ex-ante policies Focused on disaster risk reduction and management Recognized the fiscal risks and the attendant implicit contingent liabilities Facilitated increased national savings They could increase long-term well-being in the face of disasters Increased savings Effective mitigation Disciplined precommitment to provide post disaster relief and recovery
PRIORITIZED SAVINGS PRUDENT SPENDING Government responsibility: Building resiliency through effective budgeting Save government revenue first, then apply to spend Building a resilience/ savings/ rainy day fund Contributing to CCRIF in order to receive immediate liquidity at natural event Borrowing for productive, resilient investments with minimum 12% ERR Max. debt/gdp ratio of 50% with 10% buffer for disaster emergency funding Access post-disaster concessional resources based on new resilience index More balanced public finances Improved sovereign credit ratings Governments borrow cheaply on the market
Public Finance Management 1 01 Fiscal Responsibility Framework Fixed fiscal objectives or rules Nudging towards fiscal responsibility 02 Medium-Term Fiscal Framework 03 Sets multi-year targets Medium-Term Budgetary Framework Determines multi-year spending plans Annual Budget
Default Government Savings 2 Nudging the Caribbean towards fiscal responsibility Government Revenue Government accesses 90% for budget expenditures 10% saved by default
A savings Gender Targeted Regional Government fund equality More social allows Integration reliance ensures spends interventions us to react that less private will assist all and to including households disasters, sector saves with scaling more quality but can if we be resilient; need need to we borrow, want to be to we education competitive build have resilience a good for and allcredit from with the scale rating bottom up If we are to have Resilient Budgeting, there are implications Macroeconomic Productivity & Competitiveness Macroeconomic Macroeconomic Productivity & Competitiveness Economic Economic Economic growth growth growth and and and diversification diversification Strong/ Strong/ Strong/ resilient resilient resilient financial financial financial sector sector sector Private Private sector-led sector-led growth growth Opening new new trade trade markets markets Fiscal Fiscal rules, rules, e.g., e.g., max max debt/gdp Regional payments facility facility (Fintech) (Fintech) debt/gdp First First class class and cost- and costeffectiveffective infrastructure infrastructure Human Development Human Development Targeted social interventions: Targeted social Good quality interventions: education for all Good quality Workforce education skills training for based all on employers needs Workforce skills training based on Conditional cash transfers to the employers most needs vulnerable Conditional cash transfers to the most vulnerable Regional Integration Regional Integration Sustainable Society Environmental Preparedness Preparedness Strict building code compliance Strict building code compliance CCRIF, indemnity insurance, resiliency funds CCRIF, indemnity insurance, resiliency funds Environmental technology Environmental technology Climate change adaptation tools Climate change adaptation tools Gender Equality Gender Equality
AGENDA 01 Why we are vulnerable: Regional Challenges 02 Cost of Natural Disasters 03 Resilience Building: Stepping back to build better 04 Not just rhetoric: It s all about Implementation (New Ways of Working)
Building Back Better Physically, Economically and Socially Steps to Resilience 6 5 4 3 2 1 Cabinet Prioritization Planning Labs Open Day Roadmap KPI Targets Implementation Seeking Meticulous Hosting We Communicate Setting Collaborating can Publishing Gathering open leverage out KPIs execution external forums a the to the We should not let the Delivery monitoring achievements urgent of stakeholders Roadmap determine validation the share Resilience stop Unit progress us the for model of from in and Strategic Plan towards rebuilding challenges Resilience thinking government, redesign ensuring rebuilding about Direction Plan projects with and the that with important. The linked specific targets and the for business, implementing resiliency; public achieved targets rebuild are objectives and met and our targets being solicit within the and challenges of climate and community stipulated rebuilding development open infrastructure encouraging action feedback to redesigning time program to plans will develop shape and to at a both detailed uncompromising humanity s institutions accountability HOG Resilience and future. not with the just greater quality the infrastructure public Plan standards resiliency Martin Wolf, FT Columnist 7 External Audit 8 Annual Report
We should not let the urgent stop us from thinking about the important. The linked challenges of climate and development will shape humanity s future. - Martin Wolf, FT Columnist