George Davis | Economy boost a ‘progress handcuff’ for the PNP
Matters concerning the economy and dealing with violent crime are the two tracks which have provided the booming soundtrack to every election contested in Jamaica since Independence. And where the economy is concerned, both the opposition and governing parties campaign strategically to influence the electorate's answer to this unitary question: 'Are you satisfied with what your money can buy?'
Believe me, it's that simple for when issues such as the availability of credit, interest rates, level of inflation, balance of payments, quantum of international reserves, current account deficit, competitiveness of the local currency and ease of doing business are tossed into a pot and placed on the fire; it all boils down to what money - your money, my money - can buy. And the political party that can spin the stronger narrative about the strength of money in people's pockets is in pole position to capture Jamaica House.
At present, the Holness administration is constructing a strong case to win the economic argument when the next election campaign gets under way. Of course, there is more than enough time for what seems sweet now to become sour, and for that which is evidence of progress to morph into a symbol of failure. But, if Holness as the jockey can keep a straight course, keep the horse of the economy balanced and up to its work, while crucially avoiding dropping the whip, then this administration seems primed to be unsaddled in the winners' enclosure, at least where the economy is concerned. But why do I say this?
On March 12, 2015, then Finance Minister Dr Peter Phillips opened the Budget Debate, making a compelling argument about how the People's National Party (PNP) had used fiscal policy to build a solid economic foundation. He listed those things that represented progress in the PNP's economic management programme. He trumpeted the fact that passing the quarterly review tests set by the International Monetary Fund (IMF) was the crucial factor in restoring Jamaica's trust-worthiness in the international community. He credited the passing of IMF tests as the reason for the high levels of consumer and business confidence. He said the passing of the tests had enhanced Jamaica's attractiveness to both foreign and local investors. He pointed to the establishment of the Economic Programme Oversight Committee as a major achievement over the 2014-15 fiscal year, while trumpeting the projected 10 percentage point fall in the debt-to-GDP ratio by the end of the 2015-2016 fiscal year.
Current account deficit
Dr Phillips talked up the level of net international reserves (NIR), which at the time stood at US$1.9 billion, while noting that the current account deficit was five per cent of GDP. He noted that unemployment had fallen to 13.7 per cent by the end of 2014, while the inflation rate was projected to fall to about five per cent by the end of the 2014-15 fiscal year. He spoke of Jamaica's improvement in the World Bank's Doing Business Report, Global Competitiveness Index and 2014 Forbes Best Countries for Doing Business Report. He told the House that day that, "all indicators point to the growing competitiveness of our exchange rate and even stronger rates of investment activity and job creation".
So here is the problem that Dr Phillips has: in almost every area where he cited progress and solid achievement in the macroeconomy and fiscal environment, this Holness administration has taken things further. Whether it be the level of the NIR, which at last report stood at US$3 billion, or the debt-to-GDP ratio or unemployment or inflation or the competitiveness of the Jamaican economy or the ease of doing business index or rate of job creation, the Holness administration has recorded improvements in almost every category compared to the last PNP administration. That creates what I am calling a 'progress handcuff' for Dr Phillips and the PNP, shackling them in their attempts to craft a saleable argument about their capacity to improve the economy. As things stand now, and I can't stress 'now' enough, Dr Phillips' PNP will find it very difficult to convince the public that the government in office is mismanaging the economy. And for any opposition party to not have that rifle in their arsenal, makes for a very difficult time on the battlefield. Selah.