EDITORIAL - Mr Holness and the economy

Andrew Holness' effort to place the Jamaica Labour Party's (JLP) economic ideas before the public, as the Opposition leader attempted on Tuesday, is encouraging.

For, as we have said several times since Mr Holness beat back Audley Shaw's challenge for the leadership of the party, the JLP must quickly cast itself as an alternative government, with credible economic policies. But with his workload as party leader, and on the evidence of his efforts so far, Mr Holness is obviously not the man for the shadow finance minister's job.

It is urgent, therefore, that he put together a new, talented economic team, without, if necessary, Mr Shaw, the finance minister during the JLP's four years in government, but who, since his defeat, has made himself hard to get. Yet, in the current dispensation, Mr Shaw's primary value to the shadow Cabinet - and to Mr Holness - would be political, given the 43 per cent of the votes he received in the leadership election.

Among the immediate tasks of the economic team would be to formulate a strategy for the country's fiscal management and Jamaica's engagement of the International Monetary Fund (IMF), assuming that a JLP administration would divert significantly - as Mr Holness sometimes hints would be the case - from the current Government's programme with the Fund.

The job would include identifying priorities and helping the Opposition to bring greater precision to his pronouncements on the economy, including when he proposes government stimulus to drive economic growth.

The history of Jamaica's economic crisis is well known, with its four decades of little or no growth and the fact that our Government compensated for an absence of income generation with heavy borrowing. We also know that this led to a government debt that was approximately one and a half times annual output, giving Jamaica one of the world's worst debt-to-GDP ratios.

With other people's money and selective default, sometimes called debt exchanges, you can prop up and maintain an overvalued currency and give an illusion of economic stability. The crisis unfolds when lenders begin to say no or demand rates higher than you can afford, or your bilateral partners, even when they negotiate new loans, decline to disburse the cash until you can show a path to fiscal discipline, stamped with the imprimatur of the IMF.

difficult undertakings

That, in a sense, is what eventually reached Jamaica, and why we are faced with a programme of economic austerity, including a requirement of a primary surplus of 7.5 per cent of GDP so as to bring the debt about equal to GDP by 2016.

These are difficult undertakings, made harder by Jamaica's limited room to manoeuvre, notwithstanding populist calls for Keynesian-style government spending and subsidies to stimulate the economy.

Even if there is a possibility to nibble at the margins, the Government must, at all costs, maintain fiscal discipline lest it squander painfully earned gains. Its other big job is a robust reform of the economy to remove impediments to the private sector, making it the real driver of job creation and growth.

Now, if Mr Holness has practical ideas contrary or in addition to those being implemented or already on the table, we, and Jamaicans generally, would welcome them. But more to the point, the recent Senate appointments show that Mr Holness can find the talent to complement his own skills.

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.