Sun | Dec 4, 2016

Portia, Peter must close strong

Published:Monday | March 23, 2015 | 12:00 AM
Phillips
Simpson Miller
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The Budget Debate closes this week, and Prime Minister Portia Simpson Miller, after a poor week in front of the television cameras, must turn up in the House of Representatives and try to convince Jamaicans that the Government she leads understands and has the capacity to deliver the country out of its malaise.

Any opinion poll conducted now will reveal that most Jamaicans do not feel Simpson Miller and her team have been skilfully balancing the books while balancing people's lives. In fact, most Jamaicans are at this point questioning whether Simpson Miller believes fiscal numbers can be eaten and that people do sleep on balance sheets.

Following the opening of the Budget Debate two weeks ago, the parliamentary opposition has done a good job of advancing the argument that the country is falling apart under the watch of Simpson Miller and her team.

"The impoverishment of our people has gotten (sic)worse since 2012. People are no longer talking about 'oxtail and curry goat'. As a matter of fact, chicken back is now priced way above the means of many Jamaicans. What many are forced to buy these days is fish back," Opposition Leader Andrew Holness said.

Audley Shaw, the opposition spokesman on finance, was not to be outdone. He took aim at Dr Phillips and has imposed licks on him for the constant reference to debt reduction, which is a central part of the country's International Monetary Fund (IMF)-backed economic programme.

He told Parliament that the debt-to-GDP figures for fiscal year 2014-15 are 131.6 per cent, not 119.6 per cent as was projected, and that the 131.6 per cent is no different from the 131.5 per cent that the Jamaica Labour Party (JLP) left when it demitted office.

Phillips must respond to this matter which has been appropriately raised by Shaw. The minister cannot keep missing these very important targets, as it will only prolong the gut-wrenching austerity measures that we are called upon to endure.

Jamaica must achieve a primary surplus target of 7.5 per cent of GDP, which is equivalent to $126.7 billion this fiscal year. Adherence to the programme's primary surplus of 7.5 per cent of GDP is necessary to sustain the debt-reduction trajectory.

But it does not appear the debt is moving. We hope that the finance minister will not, in the same way he has approached the matter of the wage bill, seek a waiver from the IMF on this score. Lowering the debt is crucial to Jamaica's economic prospects.

Critically, however, we cannot as a nation, continue to be like Lot's wife. Jamaica's problems, over the years, have largely been that we lack the capacity to secure economic growth in any real way because of structurally weak human, social and fiscal pillars. Let us all recall what the Jamaican authorities told the IMF in May 2013, when it requested the current Extended Fund Facility:

"During the past three decades, Jamaica has shown low economic growth and high public debt, and has faced other social challenges. To help restore competitiveness and improve financial market conditions, the authorities have come up with a comprehensive four-year economic programme 2013-14 through 2016-17 that aims to avert immediate crisis risks and create the necessary conditions for sustained growth. The programme's main pillars include structural reforms, fiscal adjustments supported by extensive fiscal reforms, and improved social protection programs," the authorities said.

It is good to secure the temporary victories of parliamentary theatrics, desk thumping and election wins, but our advancement as a nation will not be enhanced by any of those actions.

Simpson Miller, when she comes to speak, must demonstrate the willingness to move away from the arena of trading blame. She must resist the temptation of taking grocery baskets to Parliament to illustrate what Jamaicans were able to purchase in 2007, the year her government was voted from power. She must also resist the temptation of labelling the JLP's time in office as the 'four missing years'; and she should not come to the country with election goodies.

What Jamaica needs now is growth, and, as prime minister, she must demonstrate that the growth agenda is coming together in a way that will cause Jamaicans to work their way to prosperity. She must illustrate the strides, if any, being made with the logistics hub initiative; she must tell us about public-sector reform; and demonstrate to Jamaicans that her government is serious about growth and development, and is working for the people.

At the same time, Phillips, when he closes the Budget Debate, must outline to Jamaicans, in a much clearer way, how the newest gas tax will work.

 

cap on crude oil price

 

Among other things, Phillips must indicate the cap on the price of crude oil that would trigger a reimbursement to the Government under the hedging programme that is being contemplated.

He must also tell us how the funds will be kept. Memories of the gas tax being directed into the Consolidated Fund instead of the Road Maintenance Fund to fix our roads are fresh in our heads.

The last thing we want is to be paying this $7 per litre to hedge against high prices, and to find later on that we are paying the taxes, but there is no hedge, because the money is being used to pay wages and salaries.

And this Budget Debate should not end without Phillips, once and for all, putting to rest this argument about credibility.

Very strong words have been used by Shaw in the Debate because Phillips and members of the Government continue to advance the argument that Jamaica's credibility was shattered as a result of the way in which the previous administration dealt with the Stand-by Arrangement, which went off the rails almost immediately after it left the starting gates.

"If there was loss of credibility in Washington, how come on November 17, 2011, one month before the election, the Jamaica Labour Party government signed an IDB loan for US$218 million with the IMF and with the World Bank representatives present at the IDB Board meeting?" Shaw questioned.

"Would this have been a government that lost credibility in Washington? Minister, stop it. Be truthful. When you unfairly malign the previous administration for political effect, you are also maligning Jamaica's international reputation."

Phillips needs to put this to rest, once and for all.