Sun | Sep 24, 2017

Editorial: Wanted: serious economic debate

Published:Friday | November 20, 2015 | 11:00 AM

It is not for nothing that election campaign periods are often called silly seasons. On the hustings, politicians tend to descend further into unreason.

Audley Shaw, the shadow finance minister, is already displaying serious symptoms of this malady, which we hope that he has, by now, recognised and has taken steps to remedy the underlying cause. If he has not, then his leader, Andrew Holness, needs to advise him of the problem, although he, too, occasionally betrays signs of a possible contagion.

More to the point, this newspaper - as we have often declared - insists upon substantive and robust policy debates in the campaign for the apparently imminent general election, and in no sector that is more critical than the economy, where the Simpson Miller administration has, with the guidance of the International Monetary Fund (IMF), been undertaking an often painful adjustment programme.

Serious, analytical discourse is not, unfortunately, what the electorate is receiving from Mr Shaw. Rather, they are being treated to a kind of whining, resentful complaining that could strain Jamaica?s ability to do business with its multilateral financial partners, including the Fund, should the Jamaica Labour Party (JLP) win the election and Mr Shaw is again entrusted with the management of the economy.

Mr Shaw, understandably, does not appreciate political barbs about the collapse of the IMF agreement under his watch when the JLP formed the government. He has complained that the Fund was being soft with the current administration, while Mr Holness has accused the Government of passing the IMF's tests, but 'failing the people's test'.

Last week, the Fund confirmed that Jamaica had successful completed the 10th of these quarterly reviews and that, given the trajectory of the national debt in relation to the size of the economy, it would sanction the lowering of the primary surplus requirement by a quarter of a percentage point. Another 0.25 percentage point will be snipped next year, bringing the target to a still tough seven per cent of gross domestic product.

Currently, the move will provide the Government with an additional J$4 billion of fiscal room, allowing it to cut spending elsewhere by that much less to accommodate a rise in the wage bill by $8 billion above projection.

Despite his circumlocutory innuendos, Mr Shaw essentially branded the timing of the move 'as political interference' on the part of the Fund by allowing the Government space to spend money ahead of an election. At another point, he called the move 'curious'.

He might say the same about this week's decision by the European Union to release $2.3 billion in budgetary support to the Government.

Three things are of significance. One is that the timing of quarterly reviews was established at the start of the agreement. Second, the snipping of the surplus target could take place only because the discounted buy-back of US$3 billion in PetroCaribe obligations put debt on a faster downward trajectory than anticipated.

Third, the level of the lowering of the surplus target is hardly at a level to signal an endorsement of any wanton freeing up of the fiscal reins, or a return to the indiscipline of gourmandising on debt that caused Jamaica to seek help from the IMF.

There may be differences in economic policy to be debated, but Mr Shaw is yet to do so. And Mr Holness and his team of economic wise men have not articulated a different vision either.