DESPITE THE recent spirited budget presentations by Finance Minister Davies and Opposition Spokesman on Finance, Audley Shaw, Jamaica's debt problem remains formidable with the solutions apparently elusive. In fact, there are recent reports that the international credit rating agencies have once again expressed concern about the economy's ability to come to grips with its debt problem.
No doubt it was this concern that led the PSOJ to hold its Annual Economic Seminar last Tuesday under the theme "Life after Debt." From the seminar deliberations it is clear that there are two divergent positions being advanced by the Government and Opposition on the debt issue. Finance Minister Davies views the debt as "just another challenge" facing the economy. According to him, in the same way that his administration had dealt with the problems of macro instability such as inadequate reserves and foreign exchange volatility, then the debt problem would also be taken in its stride. This point was underscored by PIOJ Head, Dr. Wesley Hughes, who argued that, in 1991, debt had accounted for 180 per cent of GDP (it now accounts for 130 per cent of GDP) but no alarm bells were rung at the time and the debt was eventually brought down.
For the Opposition however Jamaica's debt stock that has tripled under the present Finance Minister from $174 billion in 1994 to $495 billion in 2002 is a problem that threatens the economy's life-blood. The Opposition spokesman contends that this problem developed over time and would not be solved by simply trying to "muddle our way through." He warned that some contingent liabilities had not been brought on the budget and declared that as long as the current monetary policies are maintained, the debt issue will remain.
One positive in all this is that both Government and Opposition at least have stated their recognition that increased production, spearheaded by the private sector, is the ultimate solution to the debt predicament.
In this regard we support recent undertakings by Government that it plans to reduce bureaucratic bungling; and the PM has promised to improve the climate for boosting foreign investment. Similar posturing by the Opposition must also be commended.
Ultimately however whether we put a positive spin on the debt problem or raise a red flag, it is increased production that will avert the crisis. Rhetoric by the political leaders in this area should match the reality. Increased borrowing, even on concessionary terms, is a temporary palliative.
