Get the facts right, Editor

Audley Shaw, Guest Columnist

I deem it necessary to respond in a fulsome way to your editorial of Sunday, January 5, 2014, in which you seek, once again, to deliberately marginalise the achievements of the previous Jamaica Labour Party (JLP) administration.

In several editorials, The Gleaner blatantly attempts either to ignore or rewrite recent economic history. I, therefore, feel compelled to respond in the interest of truth and fairness.

In that difficult period (2007-2011), in which emerged the worst global economic crisis in over 80 years, coupled with our inheritance of an economy that grew by less than one per cent per year for the previous 14 years, we handed over an economy by 2011 that:

Reduced interest rates at the Central Bank to a 32-year low of just over seven per cent and slashed mortgage rates in half at major institutions from 20 per cent to 9.5 per cent;

Kept the exchange rate stable for almost two years at J$86 to US$1;

Divested loss-making public-sector entities that were a drain on public resources and added to the national debt;

Introduced modest but meaningful stimulus taxation initiatives that encouraged investment and growth, including:

Sharp reductions in transfer tax and stamp duty on real estate and other transactions

Abolition of estate (death) taxes to speed up transfer of ownership and utility of titles as collateral

Abolition of the dividends tax to free up capital for business expansion and employment generation

Abolition of stamp duty on the transfer of loans to increase loan portability and lower interest rates

Sharp reduction of customs duties on importation of motor vehicles, which increased sales and customs revenue,

Establishment of Tax Administration Jamaica and the large taxpayer office to make tax collection more efficient.

Many of these initiatives, aided and supported by the International Monetary Fund, have now been reversed by this Government.

large-scale borrowing

We introduced Green Papers and commenced parliamentary scrutiny of tax, pension and public sector reform. (If these were simple, why has the Government taken two years to implement tax reform, and has delayed pension reform to 2016 while public sector reform remains in limbo despite the report of the Public Sector Transformation Unit from the Jamaica Labour Party Government?

We reintroduced large-scale borrowing at low interest rates (US$3 billion, most at 0.63-2.0 per cent per annum) from the multilateral institutions, although the previous finance minister had said it could not be done and instead borrowed funds mostly at between 10-12 per cent on the private international capital market. (The Gleaner's comment that under the JLP, "multilateral agencies had cut off financing" is patently false and mischievous. In November 2011, we signed loan agreements with both the IDB and the World Bank for US$323 million, despite the suspension of IMF disbursements).

The increase in the debt to GDP ratio, which was less than the 150 per cent mentioned by The Gleaner, was occasioned largely by:

The effects of the global economic crisis that crushed revenue and foreign exchange earnings and required additional deficit financing;

The assumption of legacy debt from the previous Government, including debt from divestment of loss-making public entities and deferred financing schemes;

And the increase in the nominal stock of debt due to the devaluation of the currency during the period (with the dollar now devalued to J$106.34 to US$1, the stock of debt is now racing to the J$2-trillion mark, up from the J$1.6-trillion mark where I left it - no complaints from The Gleaner here).

Perhaps most important, the Editorial refuses to recognise that the economy was stabilised after all the initiatives kicked in, with confidence restored despite the global economic crisis and despite the suspension in IMF reviews, and yielded growth of 1.5 per cent in 2011, before falling back into recession under the sluggish management of the present Government.

Incidentally, the implementation of the Jamaica Development Infras-tructure Programme was also an important part of that growth trajectory. So was the Jamaica Debt Exchange programme which reduced interest rates from an average 17 per cent to 12 per cent before it was further reduced to single digits.

This is a necessary background to the superficial and whimsical treatment given in your editorial.

Audley Shaw is former finance minister in the JLP administration. Send feedback to columns@gleanerjm.com.

This is a necessary background to the superficial and whimsical treatment given in your editorial.