WIKILEAKS - Private-sector panic: Business leaders had no confidence in Golding

Two years after Bruce Golding was voted into office on the back of strong private-sector support, some of the country's major business leaders were reporting that they had lost confidence in him.

A confidential United States diplomatic cable sent from the Kingston Embassy to Washington said Jamaica's private-sector leaders were nervous about the delay in inking a deal with the International Monetary Fund (IMF), and that the risk of capital flight was mounting.

According to the November 2009 cable, embassy officials concluded that "when the Jamaica Labour Party (JLP) returned to power in 2007 after 18 years in opposition, the victory was met with a groundswell of optimism in the private sector, which thought the country would finally chart a course for positive growth and put an end to deficit spending".

"Two years later, the private sector is now talking about the possibility of panic in the market and the rising risk of capital flight, the initial indicators which are already being seen. Unfortunately for Jamaica, there is no other exiled political party to restore hope, and there is little confidence that either the JLP, or the Opposition People's National Party, has the courage to overcome the current economic crisis," the correspondence added.

The cable suggested that the Government's much heralded Jamaica Debt Exchange was not the creation of Golding or Finance Minister Audley Shaw, but instead, was the idea of enlightened self-interests in the private sector.

"Prime Minister Bruce Golding's lack of political courage in making difficult decisions has created a crisis of confidence in the private sector," the November 2009 cable sent by Chargé d'affaires Isiah Parnell said.

Little confidence

The cable outlined conversations between the embassy and two major players in the private sector - one of whom was tipped in a previous correspondence as a possible replacement to Dr Omar Davies as finance minister in a People's National Party (PNP) administration - who reportedly expressed little confidence in Golding putting in place an IMF agreement in time.

"(One private-sector leader) said that PM Golding lacks the leadership to address the current crisis facing the country, and that the private sector has lost faith in him and Shaw.

"(Another private-sector leader) echoed (the view of his colleague), noting that his confidence in PM Golding and his administration had fallen significantly in the past year, and that the private sector no longer sees him as able to manage through this crisis," the cable said.

According to the cable, the private-sector leader said Golding and Shaw met with representatives of Jamaica's three major financial institutions and members of the private sector to discuss Jamaica's predicament, but the meetings "never seem to result in any viable solutions to the country's debt problems".

"(The private-sector leader) suggested that he and the other two key players will formulate a debt-restructuring plan on their own that will provide breathing room for the GOJ, without overburdening debt holders," the cable claimed.

It added: "(The private-sector leader) emphasised that time was of the essence and that no one player was going to be a first mover. Thus, it may become crucial that the major debt holders coordinate on a plan, particularly because the GOJ appears incapable of seizing the initiative to broker a deal."

Knee-jerk decisions

In the meantime, the cable said one private-sector leader claimed that Golding's decision to assume the lead in negotiating the IMF agreement was a reason for his lack of confidence in the prime minister.

According to the cable, Golding was described by the private-sector leader as "one who has a tendency to make knee-jerk decisions when the situation requires a calm and steady hand".

At the time the cable was dispatched to Washington, Jamaica had been hit hard by the global recession, which exacerbated structural problems within the economy.

The Golding Government by then had decided to resume a borrowing relationship with the IMF, but critics of the administration had argued that the move was too long delayed considering the fallout in the country's foreign exchange-earning sectors due to the global meltdown.

And soon after it began discussions with the IMF agency, Shaw fired Derick Latibeaudiere, governor of the Bank of Jamaica.

Ratings agency Standard and Poor's reacted to the firing of the governor by downgrading Jamaica, but Shaw lashed the agency saying the downgrade was "hasty and unwarranted".

The cable claimed that one private-sector leader told US Embassy officials that the dismissal of Latibeaudiere during the middle of a visit by the IMF delegation was poorly timed, adding that it sent the world the wrong message about stability.