Sun | Nov 18, 2018

George Davis | It's all about perspective

Published:Tuesday | August 28, 2018 | 12:00 AM

So here we go again. The annual quarrel over the value of the Jamaican dollar, relative to its US counterpart, is on in earnest. This event is such a staple that it reminds me of hearing the voice of Allan Magnus in the background, inviting us to set our watches and clocks as the radio beeps a few times until he says, 'ade-o-clock', before making way for the BBC News bulletin.

The parties to the row remain the same: Government in one corner, Opposition in the next, with the business sector, represented in this kind of squabble by the small and medium-size players, stumbling around the ring, shouting advice and unloading strident criticism at both combatants in the same voice.

The buoyant Opposition PNP, through its leader, Dr Peter Phillips, has been at the Government's throat over the dollar slide. The opposition spokesman on finance, Mark Golding, issued a statement last Friday accusing the Government of causing panic by dispensing with the traditional managed free-float exchange rate regime, in preference for what he described as a 'pure free-float' policy. According to Golding, the Bank of Jamaica is failing, and indeed flailing, as its ongoing approach towards the foreign exchange market is affecting stability, confidence and predictability.

Meanwhile, Finance Minister Dr Nigel Clarke has been at pains to ram home the point that the 'exchange rate is not a barometer of economic health', noting that more people are employed in Jamaica now than at any time since Independence, the inflation rate is at an historic low, and the credit market has never been more accommodating.

From the PNP perspective, the fact of needing J$137.90 to buy US$1 on the back of a 9% decline in the value of the local currency in the April-June quarter is a condition for the nation to demand swift corrective action by the Government.

From the finance minister's perspective, however, the fact that almost all major currencies have declined relative to the US dollar, aligned with the reality that the exchange rate is only one of the things that affect the movement in prices, means there's absolutely no need to panic.

The question for us as we watch this set-to is which side to believe in.

Speaking at a meeting of the Rotary Club of Kingston in August 2014, then Finance Minister Dr Peter Phillips, under pressure as the local currency nosedived, said the country stood to benefit from a whole range of investment activity that was not previously possible because the dollar was deemed uncompetitive.

 

CHEAPER FOR LOCAL FARMERS

 

Dr Phillips asserted that the depreciating dollar would make it cheaper for local farmers to produce more animal feed through the planting of crops like sorghum and corn.

In April 2014 when he opened the Budget Debate, Dr Phillips dismissed concerns about the dollar slide, noting that Jamaica's nominal exchange rate does not determine whether the currency is weak or strong.

When he was opposition leader, Andrew Holness was sufficiently alarmed about the depreciation of the local currency that in June 2014, he handed a letter, crafted by Audley Shaw, to no less a figure than the IMF boss, Christine Lagarde, outlining the JLP's concerns about the impact the sliding currency was having on the lives of ordinary Jamaicans.

On Sunday, February 1, 2015, Holness asked the following questions at a political rally in East Rural St Andrew: "What is this saying to us? Does it mean that in the next 30 years, we're going to have a J$230:US$1? Is that what our economy will do? Is that the future of your children? Is that your future? We must find a new way for a better life!"

Of course, Audley Shaw rocked the house, as only he can, at a political rally in Mountain View, St Andrew, in November 2015, accusing the PNP of bringing poverty on the land by allowing the dollar to slide, wine and grind.

The message being communicated here is that criticism of the dollar is an Opposition preoccupation in Jamaica, where the two major political parties act out a well-rehearsed role, depending on which side of the aisle they sit in Gordon House.

Selah.

- George Davis is a media executive and communications consultant. Email feedback to columns@gleanerjm.com and george.s.davis@hotmail.com.