INFLATED CLASH

Economists are asserting that a solution to the sting being felt by Jamaicans as the cost of living soars is riddled with complexities, as the clash between the Government and Opposition on the matter intensified on Tuesday.

Opposition Spokesman on Finance Julian Robinson fired back at Prime Minister Andrew Holness’ suggestion that the cost of living would double under a People’s National Party (PNP) administration, calling it “speculative forecasting”.

On Sunday, Holness warned Jamaicans not to hand over the reins of the economy to the opposition party, arguing that this would have dire consequences on their livelihoods.

But in a swift rebuttal, Robinson said Holness, “in the midst of an economy struggling with severe challenges”, is relying on imagination and superstition instead of effective leadership.

“It is imperative for the prime minister to ground himself in reality and recognise the ongoing hardships faced by Jamaicans, rather than indulging in unfounded predictions,” said Robinson.

Further, he said that the last PNP government inherited an inflation rate of 7.56 per cent from the preceding Jamaica Labour Party administration in 2011 but reduced it to 3.68 per cent at the end of its term in 2016.

This is a record, he asserted, that underscores the PNP’s ability to manage inflation and enhance living conditions.

CHALLENGING ADMINISTRATION

Robinson challenged Holness to implement more substantial measures to alleviate the cost-of-living crisis affecting vulnerable Jamaicans.

“Considering that Jamaica has exceeded its tax revenue projections by over $100 billion in the last two fiscal years, there is ample room for the Government to do more to support the Jamaican consumer,” Robinson argued.

The call is buttressed by Opposition Leader Mark Golding’s repeated insistence that Holness “cushion the blow” of high prices on consumers, on one hand slowing debt repayment.

Dr Damien King, executive director of the Caribbean Policy Research Institute (CAPRI), on Tuesday noted that it is “undoubtedly true” that many Jamaicans continue to suffer under the current economic climate despite gains made over the last several years.

They should get state support, the economist told The Gleaner, adding that it is creditable that the last decade of improved fiscal management has now created some fiscal room to address that concern.

He said that the call by the PNP for this to be prioritised is welcome.

“However, what this call exposes is the inadequacy of the country’s built-in automatic social safety net,” said King.

He said that this is an inadequacy that has been addressed in CAPRI’s 2021 ‘Come Mek Wi Hol’ Yuh Han’ report, which also offered recommendations.

King said that instead of treating current economic developments as a one-off need for greater social support, both the Opposition and Government should work towards building a stronger, better-resourced social safety net.

“To sum up how to solve a complex problem, the starting point for addressing that should be PATH, which already has an infrastructure and a targeting mechanism that is more effective than any other part of our social welfare architecture,” he said, referring to the Programme of Advancement Through Health and Education.

Further, he said that the decision to repay debt is always a trade-off between meeting public needs now with fewer resources versus meeting those needs in the future with more resources.

Keenan Falconer, economist assigned to the local office of the International Monetary Fund at the central bank, cautioned that it is not a wise or feasible trade-off to slow debt repayments.

He said that this would significantly affect Jamaica’s creditworthiness and the ratings which derive from that.

Consequently, he said that would have a negative effect on loan interest rates that Jamaica would be able to access from international markets and the longer-term effects would be more deleterious.

Falconer said that other avenues should be pursued in lowering the cost of living because debt repayments, especially interest costs, are not discretionary.

Added to that, he said while the overperformance of tax revenues is a feasible source of additional income, the spending envelope is still constrained in that most of this expenditure, reflected in supplementary budgets, has had to go towards public sector salaries under the compensation restructuring.

“From the Government’s point of view, it could be argued that these increases in salaries and wages are contributory to dealing with the cost of living.

“Some of the overperformance in tax revenue has also been channelled into more targeted expenditure with PATH, the JPS (Jamaica Public Service) co-pay initiative and the grants for PPV (public passenger vehicle) operators. I think that scaling up or reprising those targeted approaches at least temporarily would be a feasible option,” he noted.

kimone.francis@gleanerjm.com