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Editorial: What commitments has Mr Shaw given?

Published:Sunday | December 6, 2015 | 12:00 AM

The leaders of Jamaica's two major political parties have declared themselves on-board what, essentially, is a fiscally conservative economic platform being demanded of a post-election government by a slew of key private-sector and civil-society groups.

It's hardly surprising that Prime Minister Portia Simpson Miller not only embraced the idea, but declared the call "a vote of confidence in the policies of our Government". For, broadly, what is being demanded is continuity.

Over the past four years, Mrs Simpson Miller's administration, coaxed by the International Monetary Fund (IMF) and other multilateral partners, has been pushing through a tough economic programme, which, until the recent snipping of a quarter of a percentage point, required the Government to run a primary surplus of 7.5 per cent of gross domestic product (GDP). Another quarter-point will be cut from the ratio at the start of the next financial year, bringing the primary surplus target to seven per cent.

The requirement was not because of spite against Jamaica, but rather the outcome of fiscal profligacy that resulted in a national debt that was nearly 150 per cent of GDP as the State crowded the private sector out of the debt market by its willingness to pay high interest rates for its borrowings. It's little wonder that Jamaica endured four decades of puny economic growth.

Now, though, the Government is close to balancing its Budget; its debt-to-GDP ratio has been sliced by 20 per cent; its current account has more than halved; the interest differential between Jamaica and its major partners has tumbled; and the island's economy is improving on the global competitiveness and ease-of-doing business indices. Growth, unfortunately, remains slow, in part because of the decline in government consumption, but also because after 40 years of irresponsible government policies, the domestic private investors, especially, remain cautious, wary that the Government will return to its bad behaviour.

 

FISCAL DISCIPLINE

 

The Jamaica Labour Party's (JLP) Andrew Holness not only begs to differ on the question of the party's resolve to fiscal discipline, but insists on the JLP's credentials for fiscal conservatism. "We assure you of fiscal discipline, but we will stimulate the economy," he said.

Perhaps! But Mr Holness has some more convincing to do, especially with regard to who would lead his economic team and what relationship that person would have with multilateral partners, especially the IMF.

Audley Shaw is Mr Holness' shadow finance minister and was actually in the post during the JLP's last administration. Mr Shaw negotiated a forerunner agreement with the IMF, which collapsed under his watch in 2010 because of the then administration's reticence in pursuing some of the hard policies to which it had signed up.

Now, while saying a JLP government would adhere to the IMF agreement, party officials, paradoxically, ridicule the Government's meeting the Fund's performance targets and propose unaffordable, Keynesian-style stimulus.

Moreover, Mr Shaw overly attacks the IMF for supposedly being soft on the present Government and, by extension, interference in Jamaica political affairs. Similarly, Mr Shaw has attacked the leadership of the public-private-sector group that monitors the IMF agreement because of its positive reports on macroeconomic developments.

Given Mr Shaw's past performance and his current posture, it is important for people to know whether he would be the finance minister and what commitments he has given the JLP leader about how he would do the job.