Mon | Dec 18, 2017

Ronald Thwaites | Realistic priorities

Published:Monday | August 28, 2017 | 12:00 AM

The young lady had just received a substantial judgment sum from the State for injuries received in a fire. "Is three car me going have on the road by next month, and when the first money come from them, is Courts I am going".

The host of mediocre-achieving boys 'graduating' recently from a rural high school, when asked what would be their next move, to a man replied that they would try to get a car on the road to drive.

Then there is the girl whose relatives sponsored her a trip abroad this summer but now have no money to pay sixth-form school fees. They say they were told that education is free up to age 18.

Who could question their priorities, given the limited options in an economy built on unrealistic priorities and promises?

Before long we could have three-quarters of a million vehicles on Jamaican roadways. We are near to doubling the number of used cars we import every year, most of them for domestic use or to run as taxis, the minority for directly advancing the production of goods and services.

When we set off the foreign exchange cost of importing and maintaining vehicles and add the price of the fuel to run them against the total value of our hard-currency exports, there is little or nothing left.

One used-car dealer told my colleague Ralston Hyman recently that the banks and credit unions are on "a race to the bottom" to finance motor vehicle purchases. The interest rates on these loans are into low single digits with repayment periods stretching into double-digit years.

Not long ago, it was the government which gobbled up bank credit. It is hardly an overstatement that now it is car loans which dominate. And seriously, do we know if all the capital to finance each middle passage of the huge white ship crammed with vehicles comes from legitimate sources?

All this when the public continues to pay out billions every year to prop up the chronically failing Jamaica Urban Transit Company and when, despite the highways, commuters experience unrecoverable loss of efficiency and convenience through congestion and indiscipline on our roads.

For how long and to what extent is this sustainable?

Successive governments continue to evade the central defect of our economy, in that we spend way more foreign money than we earn and thus place ourselves in thrall to those who lend to us for their profit, whether derived in unconscionable conditions for foreign direct investment or in the unquestioned margins, spreads and fees of financial institutions.

Of course it is true that owning a 'criss car' is a big 'step up inna life'. In present reality, where the majority of citizens live at very basic or sub-standard levels but with high levels of aspiration, fueling consumption will be very popular. But can Jamaica's macroeconomy support this?

 

ECONOMIC DECLINE

 

Official figures tell us that the economy has declined during the first quarter of this financial year with scarcely more optimistic prospects to come, despite the hype. Capital spending is weak and we meet our IMF targets only by squeezing more taxes out of poor people and by corraling the funds held by state-controlled agencies.

Contrast the experience of an entity applying for credit to expand an agricultural enterprise earning and repatriating only foreign exchange. Because agriculture is risky while selling repossessed cars is not, most institutions won't entertain you beyond the front door.

Then there was the otherwise receptive bank manager who "just wished that the collateral was in Kingston 6". Not to mention the long, long process of review which leaves the business person missing crop and market cycles and often receiving money when you cannot use it, but must pay interest anyway.

There is no positive future in continuing to spend more foreign exchange than we are earning. The Parliament and the media ought to be forums for setting targets, reducing obstacles, encouraging and holding sectors accountable for hard-currency earnings and retentions. Instead, the dialogue is dominated by divisive chat, consumerism and bling.

This article is intended to provoke a much-needed discussion on realistic economic priorities for individuals and for the nation.

- Ronald Thwaites is Central Kingston member of parliament and opposition spokesperson on education and training. Email feedback to columns@gleanerjm.com