Delroy ChuckJAMAICA HAS suffered, and continues to suffer, from the predominance of politics, the lack of visionary and strong leadership, the failure to create wealth and to expand the economy, the pervasive indiscipline and corruption in national life, the unchecked State abuses and injustices and, perhaps, most significantly, the loss of our moral compass. We are now engaged in endless talk about national recovery, as we attempt to rescue and save the nation from further decline and disintegration.
The Partners for Progress, a private sector initiative, inspired by the success of the Irish model, strongly believes we can be rescued if only everybody joins in a partnership to pull Jamaica out of its economic rut. It is a pipedream. Like so many other well-intentioned initiatives, retreats, social contracts, it is a lost cause. We need to identify and correct the source of our decline and disintegration. Until we do, there can be no recovery.
ACCEPT BLAME
A problem can never be fully resolved without acknowledging there is one. A government that is politically addicted to loans, begging and the distribution of resources cannot understand and accept blame. This Government has never accepted that its policies are the causes of our financial and economic problems. It has never accepted that it brought about the collapse of the financial institutions. It has never accepted that high interest rates are choking the productive sector and transferring wealth from the poor to the rich. It has never accepted that we have a fiscal crisis, or for that matter any crisis at all. The Government is content with holding the reins of power, exercising authority and taking credit for the people having more cars, more phones and more 'gals'. The Government believes it is on the right path, and for God's sake cannot understand why the rest of the country won't join in! Can the private sector get the Government to acknowledge it is on the wrong path and, therefore, prepare to change course and join in a partnership for progress?
Well, listen to the voices emanating from Government. Read carefully Dr. Omar Davies' letter in The Sunday Gleaner, January 18, and ponder carefully whether under this Finance Minister there is any hope of economic recovery. Any assessment of our economic problem will identify high interest rates as the major obstacle to economic progress. There simply can be no real and sustained economic recovery without high interest rate being brought to a reasonable, single digit, level. Yet, that is unlikely to happen now or for the foreseeable future. We are locked into a Eurobond for the next 15 years at a usurious interest rate of 13 per cent when less than five per cent is standard. Treasury bills are coming on the market at 22 per cent for two and more years, which means there is no hope to bring interest rates down in the near future. Well, the rich will get richer and the poor will continue to suck salt.
As far as Dr. Davies is concerned the problem is not high interest rates. In his letter, he asks why did BNS, CIBC and JNBS survive when other financial institutions were tumbling around them. The answer is simple, Dr. Davies, they stuck to core business and invested in the safest instrument then, government paper. Other institutions were assisting the farmers, developers, home owners and investors to develop the real economy but got punished with the Government's high interest rate policy. NCB, which took over Mutual Life and Mutual Security Bank, collapsed from the non-performance of its loans. NCB costs the taxpayers in excess of 50 billion dollars, yet it was sold for nine billion dollars. Well, NCB and other financial institutions have got wise, or so they think, and now invest the majority of their portfolio in government paper. When these government papers cannot be redeemed, who will bail us out?
We cannot go on like this! Unless something is done, our country will not only be a basket case, entrapped in debt, but will be utterly bankrupt. What is the solution? The Government has to curb its appetite for debt, bring the interest rates down even to the detriment of the exchange rate and cut expenditure drastically. If Government is not prepared to act now, it will definitely collapse and, sadly, bring down the rest of the country.
THE IRISH EXPERIENCE
The Irish experience was no different to ours, yes, but it had a change of government that was prepared to take the hard decisions and face the political reality. "The radical and painful correction in the national finances" explained Mr. Ray MacSharry, the new Minister of Finance, "paved the way for the- high growth and low inflation that followed." He explained in his book The Celtic Tigers that the previous government had "tried and failed to break out of the vicious circle of high interest rates, low growth, rising debt and (unemployment)."
His solution was to cut spending to the bone, no expenditure was sacrosanct, which means simply living within your means. The Irish experience was nothing more than a determination by a good government to govern well, to take the unpopular decisions, to put everything else before partisan politics and self-interest, and the rest is history. I am not sanguine that the present Government will do what has to be done and, thus, remains the main obstacle to economic recovery.
Delroy Chuck is an attorney-at-law and Opposition Member of Parliament. He can be contacted by e-mail at Delchuck@hotmail.com.
