EDITORIAL - No more procrastination, PM
There will be temptation among skittish members of the Government, we fear, to slink behind the recent acknowledgement by the International Monetary Fund's (IMF) Chief Economist Olivier Blanchard that the Fund underestimated the potentially deflationary impact of its policies in Greece to escape having to make the hard choices on adjustment in Jamaica.
It is hardly coincidental, we believe, that there has been, in recent days, a fast-track circulation of reports on the paper by Mr Blanchard and his fellow IMF economist Daniel Leigh, as the Cabinet prepared for today's start of a big retreat on the economy.
The most important issue at these discussions at Jamaica House - our preferred location would be one of the uninhabited Pedro Cays off Jamaica's south coast - is the economic support agreement the Government is negotiating with the IMF and the performance targets that are to be tied to it.
Everyone knows what is at the core of Jamaica's economic crisis. Like Greece, we borrowed irresponsibly, facilitated by equally irresponsible lenders. We now have a debt that is upwards of 140 per cent of GDP, the servicing of which consumes nearly 60 per cent of the Government's annual Budget and which all state taxes and grants barely cover.
That debt is no longer sustainable. It is not only that servicing it sucks resources away from productive investment, but there are a few people around who are either willing or capable of continuing to feed Jamaica's borrowing habit.
The upshot: We have to spend less, be more efficient in how we spend, and do a far better job of collecting taxes.
Our Government says it agrees with the IMF that these objectives should translate to, among other things, the following deliverables:
A cut in the public-sector wage bill relative to GDP;
Having government workers contribute more to their pensions;
Eliminating the authority of the finance minister to throw around tax waivers; and
Making the public bureaucracy facilitatory of enterprise.
While the IMF has placed these among the policies that it wants the Jamaican Government to implement, the Simpson Miller administration has claimed full ownership of these ideas. Yet it has done little concrete about their implementation.
The problem here is that these are tough things to do that will potentially carry a political cost to an administration that has populist inclinations. Hence, some members of the Government see the recent IMF technical paper as offering a loophole through which they might escape.
What is to be noted, however, is that Messrs Blanchard and Leigh did not argue against fiscal consolidation, although they opened a case for some adjustment of the pace at which this takes place. They certainly did not argue for fiscal or political cowardice.
The truth that Prime Minister Portia Simpson Miller and her Government should know is that, for each day that they procrastinate over doing what is right, there is an exponential worsening of the crisis. The prime minister should be reminded, for instance, of the more than J$89 billion in principal payments to be made next month, without any certainty at this point that there are lenders who are willing to roll over the obligation.
The bottom line: Cabinet members should not leave their retreat unless they emerge with a credible programme which they will start to implement immediately.
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