Canute Thompson | Truth and political bias

One of the flaws some people make when engaging an opponent in an argument is to accuse the person of having a bias. The fact is that all of us have biases. The key is to be able to recognise, admit, and contain them and thus limit their impact on our work and our utterances. The fact of having a bias does not, therefore, limit the capacity of a person to argue factually or to assert politically colourless truth.

One politically colourless truth about which the country has been somewhat equivocal, even as it benefits from same, is the contribution of Peter Phillips (Minister of Finance 2012 to 2016) to the economic stability the Jamaican economy now enjoys.

The state of the Jamaican economy

The dominant narrative over the past four years has been the stewardship of the Holness administration. I am on record as critiquing the Andrew Holness administration for not being particularly good at economic management.

I have contended that merely keeping the economy stable was not good enough, and failing to grow the economy by the much-vaunted five per cent per annum, or even the quietly revised two per cent, must be recorded as a failure.

What is instructive is what made the five per cent promise so compelling. For the last 40+ years, growth in the Jamaican economy has averaged one per cent per annum. Thus, when Michael Lee-Chin, Aubyn Hill, and Holness proclaimed “5 in 4”, it could not be, as some would have had us believe, a cumulative five per cent growth at the end of four years. Lee-Chin was emphatic in an April 29, 2016 interview that he meant annual growth of five per cent.

Notwithstanding the failure to achieve commendable growth, the macroeconomic fundamentals remain strong – downward trend in debt to gross domestic product (GDP) ratio, net international reserves, inflation (albeit that the range of items included in the consumer price index(CPI) needs revision), interest rates, tax collection.

But the truth is we did not get here overnight or by accident, nor along an ordinary path. The evidence shows that the journey to the 2018-19 fiscal year when for the first time in decades there were no new taxes and 2019-20 when there was a tax giveback, began in 2013, under the stewardship of Portia Simpson-Miller as prime minister and Peter Phillips as minister of finance.

The Jamaican economy 2007-2011

When the Jamaica Labour Party (JLP) assumed power in 2007, we were on the fringes of an emerging global recession. The JLP, having ended its borrowing relationship with the International Monetary Fund (IMF) a decade earlier, had been under a staff monitoring programme.

In the run up to the 2002 election, there was massive pre-election spending, the infamous “run wid it” decision of then Minister of Finance Omar Davies. There was also the financial sector collapse which was stabilised through the creation of the Financial Sector Adjustment Company.

Thus, by 2007, those issues were baked into the economy model. The biggest challenge facing Jamaica then was the global economic recession. Then Minister of Finance Audley Shaw proclaimed that the recession would help Jamaica.

In addition to badly misreading the likely effects of the recession, the Government delayed re-entering a borrowing relationship with the IMF. By the time it did in 2009, there were wider cracks in the economic super-structure and after facing one ‘test’ under the IMF programme, the Government of Jamaica walked away from the agreement.

Thus, in the 2011 elections debate, with Bruce Golding having been forced to step down as prime minister, having sacrificed his career in defence of Christopher ‘Dudus’ Coke, Holness and Simpson Miller were asked about how they would address the impasse with the IMF. Holness did not have a clear answer and Simpson Miller made it seem easy promising that she would get it done in two weeks.

Peter Phillips and the miracle of 2012 – 2016

Simpson Miller’s prediction that a restored agreement with the IMF would be easy could not be any further from the truth, for as Peter Phillips declared in an interview with Nationwide recently, the process was long, painful, humiliating, and intense.

But the price paid in this long and painful experience is what has brought Jamaica to the place where we are now with a strong economy, one described by the Financial Times as an economic miracle.

When Phillips assumed the reign of the tough IMF negotiations, the whisper in the international financial community, as the Financial Times report was “has Jamaica crashed as yet?”. The IMF’s then Managing Director Christine Lagarde described Jamaica as a pariah state and the European Union and other bilateral partners were scorning Jamaica. A deal with the IMF was critical to the way forward for Jamaica.

But the Financial Times is not the only place at which the successes in turning around the Jamaican economy have been described. Jacqueline Charles, in her June 15, 2019 piece in The Miami Herald on Jamaica’s economic turnaround, titled ‘Jamaica once couldn’t pay its light bill. Now its economy is welcoming Porsche and BMW’ discusses these successes.

In my article published in The Jamaica Observer on June 25, 2019 titled ‘From Bruk Pocket to Porschperity’ I cited Charles’ article, noting that she located the journey towards our economic turnaround as beginning in 2013 when the then People’s National Party administration laid the foundations. Charles quotes former Bank of Jamaica Governor Brian Wynter, who said that: “What we’ve seen over the last five, six, seven years are things that nobody thought you could tackle.”

Jamaica became a poster child of the IMF by 2015, much to the chagrin of some and in that same year, The Gleaner named Peter Phillips the ‘Man of the Year’. But the visionary leadership of Peter Phillips in turning around the Jamaican economy has been badly understated.

Most Jamaicans have not been made to understand and appreciate the depth of what he accomplished, and we have all but been ungrateful. Rather than crediting Phillips for these spectacular accomplishments, which outsiders have noted and celebrated, many have sought to demonise him. Was the economy perfectly managed by Phillips? No! Is it being perfectly managed now? No! Have the tough decisions that Phillips took as Minister of Finance helped Jamaica? A resounding yes! Is there much more work to be done to raise the standard of living and quality of life for most Jamaicans? Yes.

Phillips laid an excellent wicket on which this Government came to bat, as Audley Shaw, former finance minister acknowledged. To its credit, the Holness administration continued the programme developed and left by the PNP.

In the not-too-distant past, a new government would have torn up what it came to office and found and started afresh. The continuation of the economic policy has served us well but there is much more work to be done.