Q&A with Nigel Clarke, IMF Deputy Managing Director

Nigel Clarke started his career at Goldman Sachs in the Equities Division in London in 1997. Since leaving the firm, Nigel has served as Ambassador of Economic Affairs, a Member of Parliament and as Jamaica's Minister of Finance and Public Service. He is now the Deputy Managing Director of the International Monetary Fund.

Nigel shares about his transition from finance to politics and how the values instilled in him during his time at Goldman Sachs provided a foundation for all of his professional pursuits.

 

How did you start your career at Goldman Sachs and what did you learn during your time here that helped you in the next phase(s) of your career?

I started in the Equities Division in London in 1997, after more than 30 interviews in Oxford, London and New York, including one with a then Vice Chairman of the firm!  I was thrilled. I was just finishing a D.Phil. in Numerical Analysis at Oxford University and filled with excitement about joining GS. I started as a trader on the equity derivatives desk where I covered the smaller European markets at the time.

I loved every minute of my time at Goldman Sachs. It was a formative and defining experience that was instrumental in shaping my perspective and in helping mould cherished values.  This was still the time of the partnership structure and I internalized the culture, the ethos and the values that pervaded the firm. This wasn’t so hard to do as many leaders and managers embodied these values too.

During my training program, the late John Weinberg, the master of long term client building,  related to my associate class the value of “getting to know the number twos as they will eventually become number one”. Simple idea. Powerful principle. His anecdotes have stayed with me. He cautioned against transactional relationships and instead spoke to the value of a long term, sincere, low ego, strategic mindset. 

I also internalized the Goldman value of “start second, finish first”. Of course, this has a literal interpretation. But its true power, for me, existed in its metaphorical and figurative dimensions. Seen through these lenses, it represented a philosophical outlook and a way of life, reflecting the values of strategic patience, precision timing, and execution over noise and speed. 

The Goldman value of “long term greedy”, which I was taught at GS, transcends the material domain. It spoke to me of the value of building trust, which is its own currency, and conducting oneself in a way that is repeatable, sustainable and reputationally sound. It shunned overly opportunistic behavior in favor of an attitude predisposed to building enduring bonds.

These values were chiselled into me at GS and they provided a strong foundation for my professional development and pursuits.

Finally, the concept of public service as a high ideal was cemented during my time at Goldman Sachs. I may have harbored such thoughts before Goldman but my experience at the firm provided important validation and examples of these values. I was deeply inspired by the many Goldman executives and officials, throughout the firm’s history, including  while I was an employee, who embraced, contributed to and excelled in public service. Though I didn’t have concrete plans at the time, I knew that I wanted to emulate them.

What made you decide to venture into politics in 2013 and what were your initial priorities?

My transition into politics was gradual. The Upper House of Parliament, the Senate, is an appointed chamber whose members have full time occupations. As such, Senators are union leaders, academics, lawyers and business people and hold many other vocations. So I tiptoed into politics by accepting an appointment to the Senate in 2013.  I was otherwise acquiring, building and running businesses in the Caribbean and Central America. 

Up to that time, and across the 1970’s, 1980’s, 1990’s and 2000’s,  Jamaica had experienced chronic macro instability: unsustainably high debt, insufficient foreign exchange reserves, including 17 years of negative reserves, high inflation and double digit unemployment rates. The then administration had just entered into Jamaica’s 15th IMF program, with debt now at 145% of GDP, and none of the previous programs, over the decades prior, had succeeded in restoring macro-economic stability.

I was attracted to the possibility of making a difference by advocating and arguing for the reforms embedded in the then IMF program. I actually positioned myself to the right of those reforms i.e. pushing for more. This involved a unique element: I was on the Opposition bench. Usually, in the tradition of a two party parliamentary democracy, the Opposition just opposes. In that spirit, economic reform packages provide ample opportunity for such opposition.  Instead, with the support of the party leader, I advocated for and debated legislation on fiscal rules, an insolvency framework and central bank reform, among other issues, in contrast to taking the traditional, transactional, and more short-term, approach.

Though I didn’t know it at the time, the principled positions I took on economic reform, as an Opposition Senator, provided me with the credibility and platform to take on even bigger assignments in the future.

From 2018 to 2024, you served as Jamaica's Minister of Finance and the Public Service as well as a Member of Parliament. What did you set out to accomplish and did you achieve your goals?

Against conventional wisdom the then Opposition won the 2016 elections while Jamaica still had a year to go in an Extended Fund Facility Arrangement (EFF) with the IMF. 

This was a critical time as the incoming administration won the elections with a fiscally expansive campaign pledge that was fundamentally incompatible with the prevailing IMF program. Meanwhile, Jamaica’s progress under the IMF program with the outgoing government was very encouraging but debt was still high, foreign exchange reserves though improved, were insufficient, and unemployment, though lowered, was still in the double digits. As such, business, labour union and academic communities desired program and policy continuity.

As I had spent a few years in the Senate studiously engaging with, and supporting the IMF program, in contrast to many within the party, I found myself in a unique position. I had the trust of the new prime minister, as well as the technical knowledge, experience and credibility to engage with the Fund.

The prime minister appointed me Ambassador of Economic Affairs in 2016 where I represented Jamaica’s interests with the Washington-based institutions. With his support, I quickly worked to successfully resolve the existential fiscal impasse, then to terminate the existing EFF and simultaneously, with the support of technocrats,  negotiate a new three year IMF program in what came as a positive surprise in Jamaica. This preserved the gains of the previous program, and  allowed Jamaica to compound and build on these. . This was a departure from previous practice where governments often uprooted the work of the governments they replaced. This was the best chance for Jamaica in a generation and confidence soared. 

This led to my appointment in 2018 as Minister of Finance and the Public Service. But first I had to navigate a huge change. Under the constitution, the Minister of Finance must be an elected member of the lower house of parliament. I was fueled by the conviction that Jamaica’s potential lay far beyond its achievements to date and by the passion to see this potential realised. I embraced the culture shock of the transition to full time public life and was elected Member of Parliament in a special by-election on March 6, 2018 and then appointed Minister of Finance and the Public Service, on March 26, 2018.

For just under seven years after that, until October 2024, I pursued economic policies that restored, and entrenched, macroeconomic stability in Jamaica after an absence of this critical economic prerequisite for over 45 years. By the end of the fiscal year when I left office, Debt/GDP was 68%, down from 120% when our government came to power, and the lowest since the mid-1970’s. In addition, Jamaica experienced the longest stretch of consecutive quarterly economic growth in its history, since growth was measured quarterly in 1997. Stability allowed for the business cycle to be elongated to 20 quarters, broken only by the COVID-19 pandemic.  Foreign exchange reserves tripled and exceeded adequacy metrics. Unemployment, which we inherited at 13% was lowered to 4%, the lowest in Jamaica’s entire history. 

Following on from this, and quite gratifyingly: in the year before I left political office, poverty also registered the lowest levels in Jamaica’s history. Inflation, which bedevilled Jamaica for all of my life up until recent times, was kept within target range i.e. low single digits, with the only exception of the COVID period. In a country where macro-instability translated into the endless introduction of new taxes for 22 of the previous 26 years, I am proud of a record of “no new taxes” across my years as minister of finance, which was unprecedented. Instead, I established a habit of abolishing distortionary taxes.

All of these achievements were attained despite the devastating consequences of the COVID-19 pandemic when the economy declined by 10%, revenues plummeted and debt ratios climbed appreciably. Navigating this complex period was, of course, extremely challenging.

However, the policy desire that attracted me most to take on the challenge of the finance ministry was the opportunity I saw to make the central bank independent and to formally adopt an inflation targeting regime. I was at Goldman Sachs in London when Gordon Brown enacted this reform in the UK, with great success, and I  long held this as a goal for my own country. Decades of fiscal dominance had de-capitalised the central bank through annual losses among other casualties. The first task, therefore, was to decisively recapitalise the central bank, which was achieved. I then pursued a bipartisan path towards new central bank legislation that would enshrine independence. The bipartisan approach meant that it took longer to achieve, but it made the reform more durable. 

Central bank independence was brought into the force in December 2020, in the midst of the pandemic. I had every reason and right to delay but I was totally committed to the policy. In addition, the legislation strengthened the governance of the central bank, lengthening the tenure of directors, ensuring that those tenures are staggered across time in perpetuity, ensuring that the political cycle does not interfere with the governance of the bank. The legislation established statutory committees including a monetary policy committee whose minutes are made public by law.

I set out to achieve other institutional reforms in the belief that enduring change has to transcend individuals. You need laws. However, sometime laws are not enough: You need institutions. 

To give Jamaica the best chance of maintaining a fiscally sustainable path, beyond my time in office, I led the passage of laws that established an independent fiscal commission which serves as a fiscal watchdog, and as an arbiter of Jamaica’s fiscal rules, with the independence to access information and communicate directly with the public.

Also, given Jamaica’s vulnerability to natural disasters I pursued a multi-layered framework for the financing of the fiscal risks of natural disasters. Within this framework I entered into a set of contingent instruments that cover the quadrant formed from the axes of disaster frequency and disaster intensity. These include legislated annual fiscal savings for natural disasters, contingent credit claims, parametric insurance and under my tenure Jamaica became the first small country to independently sponsor a catastrophe bond. 

Other firsts for Jamaica that I pursued and achieved include Jamaica’s first international placement of a local currency denominated bond and Jamaica’s first internationally placed securitization, both dividends of macroeconomic stability.

Taking the view that governance is of macro critical importance I led the enactment of legislation that improved standards of governance of public bodies. In addition, I led successful privatization and PPP programs and pursued public procurement, public investment management, public sector compensation, tax policy, customs, and financial sector reforms.

What motivated you to leave your position as Minister of Finance to become Deputy Managing Director of the International Monetary Fund?

I worked with the IMF,  through a range of instruments, over the course of nearly nine years as Ambassador of Economic Affairs and later as Minister of Finance. These instruments include an Extended Fund Facility, a Precautionary Standby Arrangement, the Resilience and Sustainability Facility and the Rapid Financing Instrument. Over this time I gained a lot of respect and admiration for the IMF and a deep appreciation for the transformative potential of the work it does around the world.

In 2022, I was elected by my ministerial peers across the hemisphere as Chairman of the Board of Governors of the Inter-American Development Bank. This provided me with insight into the workings of Washington-based multilateral financial institutions.

Furthermore, by 2024, in my role as minister of finance and the public service, I had achieved a significant transformation of Jamaica’s macro-economic fundamentals; I had advanced institutional reforms designed to provide the best chance of safeguarding stability into the future; and, I had demonstrated the amazing possibilities that arise from principled economic stewardship, even for countries categorised as developing. So by the time this opportunity came, I was open to a new challenge.

Also, I was grateful for the support of the international community, through the IMF and other multilaterals, that provided financial and technical resources that assisted Jamaica through a most difficult chapter. I therefore thought that I had an obligation, if asked, and if the timing was right, to make myself available to help provide that support to others.

I demitted office as Minister of Finance and the Public Service at the end of October 2024, and it was tough. Bittersweet is perhaps the best word!  However, I am proud of what I achieved in my previous role and I am fully committed to the job ahead.

Have you leveraged your GS network since leaving the firm? If so, how?

I really have not. Up until now I have existed outside of the formal GS network for my post GS career. As Jamaica’s minister of finance, I visited GS annually for investor deal and non-deal roadshows. So, I engaged with the firm professionally but nothing more. However, on a personal level, I am fortunate to have incredible and enduring friendships, of nearly 30 years in duration, with former GS colleagues in equity derivatives. To this day, some of my best friends in life are also GS alums!