EDITORIAL - Mobilising for the tough job ahead

Like the public-private sector committee it named to monitor Jamaica's agreement with the International Monetary Fund (IMF), this newspaper congratulates the Government for having met the targets for the programme's first quarter.

But we are aware that while some of the critical benchmarks, particularly the primary surplus and overall deficit on the Government's account, performed substantially better than projected, these tests will only get harder going forward.

The fact is, these outcomes were not the result of a robust economy. For in the period when the finance ministry was making this fiscal gain, the Jamaican economy declined by 0.4 per cent, following a slide of 1.3 per cent in the previous quarter to April. Indeed, it was the fifth straight quarter of negative growth.

The positive result was, essentially, an exercise in fiscal discipline by the finance minister, Peter Phillips, and his technocrats.

Between the start of the fiscal year in April and the end of June, the Government earned J$830 million, one per cent less than it projected in revenue - most of the shortfall coming in taxes.

Dr Phillips, however, compensated by keeping a lid on spending, which was approximately $5.6 billion, or six per cent below budget. Capital spending bore the brunt of this containment. The Government, in this area, spent J$2.3 billion, or a little over 21 per cent less than it projected. With a Government that is already inherently contractionary, the deeper bite into consumption implied by the finance ministry's action would have contributed to an even more sluggish economy.

Unsustainable

Nonetheless, we are convinced that the Government has few options if, eventually, it is to slay the dragon that has for too long tormented Jamaica's economy - our debt of $1.8 trillion.

That debt is unsustainable. It consumes more than 40 per cent of the Budget and over half of what is collected in taxes and grants, which sucks investment away from the physical and social infrastructure necessary to support economic activity. It also means that the Government competes with the private sector for capital.

The solution to this conundrum is less borrowing by the Government, which means broad reform of the public sector to dampen its appetite for debt. It also implies the private sector revving up and being in control of the engines that drive the economy.

This brings us to the concern of the Economic Programme Oversight Committee (EPOC) at the continued absence of economic growth, and that "sections of the private sector remain sceptical" that the IMF programme will succeed, despite its promising start.

Jamaica's history of failed and derailed IMF programmes is part of the reason. Further, the economy has been hardly out of recession since the onset of the global financial crisis in 2008.

But as is hinted at by EPOC consistently, and we believe persuasively argued by this newspaper, equally, if not more complicit, in the current failure has been poor communication. There has been an absence of a comprehensive and coherent programme to articulate action and intent of the reform agenda. If there is one, it has not been executed in a fashion that fires up anyone.

The private sector has to be part of this project. But the mobiliser-in-chief has to be the prime minister, Portia Simpson Miller, given her unique skill at communicating to the majority of Jamaicans. This requires investing political capital, which the PM does not seem willing to risk.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.