PM: Jamaica's excessive borrowing must stop
Jamaica needs to desist from its practice of excessive borrowing if the country is to grow economically, stressed Prime Minister Andrew Holness.
He made this declaration yesterday during a National Competitiveness Council Meeting, held at the Office of the Prime Minister, where the statistics of Jamaica's economic progress and failure were presented.
The statistics were part of the latest publication of the 2019 Global Competitiveness Report (GCR) and the Doing Business Report (DBR).
FINDINGS FROM THE REPORTS
• The GCR was published mid-October and indicated Jamaica's fall from the 78 position to 79, out of 140 countries.
• The DBR, published at the end of October, showed Jamaica slipping five places to 75, out of 190 countries. Though a significant slip, there was a slight improvement in the overall score, indicating that the economy of other countries has grown much faster than Jamaica's.
• Jamaica's best performance indicator was speedily dealing with construction permits, improving from 98 to 76.
• Jamaica improved by eight spots in the category of accessing credit, moving to 12.
• Poor performance indicators were registering property, which ranked Jamaica at 131. For trading across borders, Jamaica ranked 134, while 89 was the rank for protecting minority investors.
• The island fell down from 91 to 115 in the category of access to electricity.
FALSE SENSE OF COMFORT
Based on the findings, Holness said that ministries and agencies would now be held more accountable for implementing reforms to improve rankings.
The prime minister pointed to key reforms that must be fast-tracked if Jamaica is to move from rank 75 into the top 10 of the DBR.
"Plans are already laid. After the 2009 global financial meltdown, Jamaica was forced to confront certain practices inimical to our own development. We thought we could just borrow as much as we want and pay for it later. However, we came close to defaulting and had to pay our debts," the prime minister said.
"We have to recognise, also, that we cannot continue to depend on overseas development assistance. Our economic dependence means that many of these practices we have felt comfortable doing, in fact, have been spread falsely among the population and have given the population a false sense of comfort."
Holness pointed out, further, that the current functions of the public sector do not facilitate the private sector.
"There is no secret fund from which Government pays out salary increases. It comes from the taxes and the tax rate. The current form is not feasible. The public sector is there to serve the private sector. Ultimately, public sector is going to come to the realisation that the improvement in salaries and conditions of work depend on how well private sector performs and increases in tax payment and tax pace," said the prime minister.
"We are now moving to improve the rules around our monetary policy. We are changing our regulations and increasing the independence of the Bank of Jamaica, ensuring that we have a flexible exchange rate. All of those things are not easy reforms as you could have seen with the foreign exchange movements that happened a few weeks ago. Government stood its ground. We have to create the environment for business to flourish."