Andrew Holness | The PNP must accept their economic legacy

Recently, an Opposition Senator attempted to distort economic data, hoping to obscure the record of inflation under successive political administrations.

The numbers tell a clear story (see Table 1). But the numbers do not lie; Jamaica’s inflation record reveals a stark difference in economic management between the Jamaica Labour Party (JLP) and the People’s National Party (PNP).

The two administrations that have delivered the lowest average annual inflation since independence are the Jamaica Labour Party-led government of 1962-1972 (4.7 per cent average inflation per year) and the current JLP administration since February 2016 (5.5 per cent average inflation per year).

Contrast this with the PNP’s record, particularly the catastrophic 1989-2007 period. Over this 18-and-a-half-year period, inflation totalled a staggering 2,249 per cent, averaging 18.5 per cent annually – the highest in Jamaica’s history. In 1992 alone, inflation hit nearly 80 per cent, surpassing total inflation in the United States for the entire 18-year span between 1989 and 2007. This was not caused by any external shock – it was a direct result of reckless PNP policies.

Since independence, both parties have governed Jamaica for roughly 31 years each and equal time at the wicket makes for a fair comparison of batting averages. The cumulative inflation figures reveal that, under PNP administrations, inflation totalled 6,188.6 per cent, nearly six times the 1,076.7 per cent total under JLP administrations. The PNP’s economic stewardship has undoubtedly been defined by instability and financial hardship for ordinary Jamaicans over decades.

SHIFT THE NARRATIVE

Rather than addressing these facts, the Opposition Senator attempted to shift the narrative by selectively comparing changes in average annual inflation from one administration to the next. He argued that, under the 2011-2016 PNP administration, inflation declined by six percentage points compared to the previous Jamaica Labour Party government (2007-2011), while under my administration it has only dropped by 0.8 percentage points. However, this comparison is deeply flawed and betrays a limited understanding of economics.

Inflation does not exist in isolation; it must be carefully balanced with economic growth and employment. Too much inflation erodes purchasing power, but too little inflation can stall economic activity, discourage investment, and lead to job losses. Every economy has an optimal inflation range, determined by factors such as its structure, stage of development, productivity levels, labour market conditions, and susceptibility to external shocks. In Jamaica, the target range of four to six per cent was determined after thorough analysis of these factors to ensure inflation remains low enough to protect consumers while high enough to support economic expansion.

By the Opposition Senator’s logic, my administration would have needed to slash inflation by at least six percentage points to 0.3 per cent per year, an absurd and reckless proposition. At such low levels, inflation would strangle economic activity, discourage investment, and heighten unemployment risks. Worse, it could trigger deflation, a far more destructive economic condition where falling prices shrink revenues, force layoffs, suppress wages, and trap the economy in prolonged stagnation. The experience in other countries has shown that recovering from deflation is far more difficult and painful than managing moderate inflation.

GLOBAL ECONOMIC CONTEXT

The Opposition Senator also conveniently ignored the global economic environment. Between 2011 and 2016, US inflation averaged a mere 1.2 per cent (see Table 1), the lowest in decades. This provided an exceptionally favourable backdrop for Jamaica’s inflation reduction. In contrast, between 2016 to 2025, average US inflation has risen to 3.4 per cent, the highest of any period since our independence, driven by post-pandemic supply chain disruptions, geopolitical conflicts, and climate-related economic shocks. Despite this period of high imported inflation, my administration has kept inflation in check, with the annual rate now at 4.7 per cent, well within the Bank of Jamaica’s target range of 4-6 per cent.

INSTITUTIONALISING STABILITY

This achievement is not coincidental. It was my administration that introduced the groundbreaking reforms to institutionalise inflation targeting under an independent central bank. We passed the Bank of Jamaica (Amendment) Act in 2020, which gave the BOJ a clear mandate, as well as the operational independence, to achieve the inflation target over the medium term, without external influence.

This ensures that monetary policy is guided by expertise, not politics, and provides businesses and households with confidence in the economy. Unlike in the past, when inflation soared due to mismanagement, the BOJ now has the autonomy to act decisively to keep inflation under control.

EXCHANGE RATE STABILITY

Economists may debate whether, in a small open economy like Jamaica, inflation causes currency depreciation or vice versa, but they all agree on one thing: there is a strong long-term link between inflation and exchange rates. This concept, known as purchasing power parity, means that the higher Jamaica’s inflation rate is relative to the US, the higher will be the rate of depreciation of the Jamaican dollar relative to the US dollar.

It is therefore instructive to also examine the record on exchange rate and currency stability.

Not surprisingly, Table 2 presents a similar picture to inflation. Currency depreciation under the current administration has been an average of 2.9 per cent per year, the lowest by far of any political administration since 1972. By contrast, the worst period of currency depreciation in Jamaica’s history occurred under the PNP administration of 1989-2007 with total currency depreciation of 1,177.9 per cent, at an average rate of 14.7 per cent per year.

Cumulative depreciation under successive PNP administrations has been 4,056.4 per cent while under the JLP it has been 391.6 per cent – less than one-tenth.

Curiously, the Opposition Senator made no mention of currency depreciation in his presentation. Perhaps he realised that trying to spin those numbers would require more creativity than he could muster.

TRACK RECORD

High inflation punishes those without assets, drains the savings of retirees, and crushes those on fixed incomes. Inflation deepens inequality and fuels social injustice. Jamaicans know this all too well. We have seen it. We have lived it.

This is why the Government has undertaken bold, institutional reforms to ensure Jamaica never returns to the reckless policies of the past. We have made the management of inflation a national priority, strengthened our institutional framework, and improved our resilience to external shocks.

Under the Jamaica Labour Party, Jamaica has achieved economic stability – even in the face of global crises. Under the PNP, Jamaicans suffered through the worst periods of inflation and currency depreciation in our history even during the most favourable global economic conditions. The contrast is undeniable.

The Opposition’s attempts to rewrite history may provide political theatre, but they cannot erase the facts. The numbers tell the story. The facts are clear. This year, Jamaicans will make a choice – when the time comes, we urge people to choose wisely.

Dr Andrew Holness is prime minister of Jamaica, leader of Jamaica Labour Party and member of parliament for West Central St Andrew. Send feedback to columns@gleanerjm.com