Confronting our demons

Lambert Brown, Contributor

Monday, April 8, brought good news on the economic front for our country. The management of the International Monetary Fund (IMF) issued the long-awaited statement that it was recommending to the IMF board a four-year extended fund facility valued at US$958 million for Jamaica. This was followed by the announcement that two of our multilateral partners would be adding another US$1 billion to assist our country over the life of the IMF agreement.

The impact in slowing the rapid slide of the Jamaican dollar was immediate. The mad rush to the century mark was restrained. The increased prices in basic food and other goods caused by the sliding dollar remain, however, to make life harder for the majority of our people.

As welcome as the signs of an imminent IMF agreement and renewed multilateral support are, they cannot be seen as the solution to the fundamental problem which has resulted in the depreciation of our currency over the recent decades. We Jamaicans need to understand why, over the last 40 years, our dollar has moved from being more than a hundred per cent of the US dollar to now hovering around a measly one per cent of the green back. Too often we pay more attention to the symptoms rather than the real reason for the ailment.

It is easy to get nostalgic about what the exchange rate was in years gone by and how much we could buy back then with less dollars. It is even easier to believe that the problem is merely the failure of leadership, and that we the people have nothing to contribute to the constant depreciation of our currency over the years.

The reality is that our dollar is like any other commodity, and its price is determined by how much those who want to purchase it is prepared to pay. It is not different, therefore, than the price of ackee or mangoes. When the supply of these fruits is plentiful, the prices of either drop or stay stable.

On the other hand, when they are scarce, the price will get high and those who want it will pay a high price for them. In Jamaica, the US dollar is scarce because we are importing too much. Why should we be importing papaya, and concentrates of sorrel, june plum and lime? Why should we be importing sweets, hairpieces, biscuits, cigarettes? Can you imagine - we even import water in this land of wood and water.

imports last year

Last year, we imported US$6.6 billon of goods into Jamaica. Of this amount, food accounted for about US$1 billion. Fuel was responsible for around US$2.5 billion. Where does the money come from to pay for these imported goods? We have to earn that money from exporting our products and services so that we can earn the foreign currency to pay for our imports.

Sadly, last year, Jamaica only exported US$1.7 billion worth of goods. We imported almost US$5 billion more than we exported. The dollar becomes scarce when this happens and the price goes up, resulting in the depreciation of our dollar as business people pay more for it. When the dollar depreciates, the prices of food, gas and the cost of living increases in the country and life get harder for most people.

We should, therefore, not be surprised when the price of bread and other imported food is so high. Sometimes the Government borrows foreign money to help to stabilise the dollar. The global recession has affected most countries in the world, and it has become harder, if not impossible, for those who use to lend Jamaica foreign currency to continue to do so.

Without this foreign borrowing and increased earnings from export, Jamaica will have to cut back on how much it imports. This is one of the demons we must confront as a people if Jamaica is to survive economically and make the lives of our people better.

For too long, as a country, we have been living beyond our means. It is time to recognise that the world does not owe us a living.

Another demon that we must confront is the practice of spending more than we earn in taxes, causing the Government to depend on borrowing to run our government housekeeping budget. This year, the minister of finance has had to cut the Budget, compared to last year, because people are no longer willing to lend Jamaica any more money. Now we have to make do with less.

The unions and most public-sector workers have recognised that blood cannot come from stone. Pensioners and most financial institutions have reduced the interest rate they charge the Government for money they borrowed in the past.

Jamaica faces a national economic emergency. This is a time when we cannot continue with business as usual. If we are to successfully confront and overcome the demons of our own making, facing our economy and country, a lot of sacrifices will have to be made by all Jamaicans.

This is a time for a social partnership among all major stakeholders in the nation. The business community, while making their profit, have to show greater corporate social responsibility. Less redundancies and more creative ways to keep workers in their jobs must be found. Reduced workweeks needs, rather than whole-scale layoffs, need to be explored.

Discount facilities for workers making national sacrifices must be pursued. Workers and employers will have to examine ways of increasing total factor productivity. Idle lands should be married to the abundance of idle hands with a view to increasing agricultural output for domestic consumption and exports.

I am confident that if we are prepared to confront our demons, Jamaica will, indeed, become a place where we can proudly call home and see great prosperity. It is all in our hands.

Lambert Brown is a government senator and president of the University and Allied Workers Union. Email feedback to columns@gleanerjm.com and labpoyh@yahoo.com.