Raymond Pryce, Guest Columnist
On September 29, 2009, then Prime Minister Bruce Golding made the following comments in Parliament regarding the Jamaican economy:
"For the last 10 years, our interest cost and principal repayments have exceeded our total revenues. ... Jamaica remains perpetually hooked on borrowings. ... Our earnings cannot support our level of indebtedness, so we have to keep borrowing to repay what we have borrowed."
He also said the changes we needed to make "are things that other countries have done that have placed them on a path to sustained growth and development". Mr Golding went on to describe the remedies, among them being a "full programme of tax reform easing the burden on those who for too long have been bearing too much and sharing the burden with those who have been able to get away for too long. If Mohammed won't come to the mountain, the mountain is going to have to find Mohammed."
Mr Golding's presentation went on to list several strategies which hindsight confirms were part and parcel of the standby agreement with the International Monetary Fund (IMF) and that were never implemented - until now.
The delays in implementation of the larger economic reform agenda have compounded the situation which the Government, over the last year, has been seeking to resolve. Playing catch-up is a costly venture; especially when it is our own procrastination and political fears which have prevented us from doing what is necessary for so long.
Cometh the hour
Luckily, we are now at that hour where we can no longer dilly-dally. We must now surmount the challenges so that Jamaica can move on. That is the reality in which the Simpson Miller administration operates.
Since coming to office, the People's National Party administration has outlined the difficulties of the global economic environment, and that a weakened global economy has sent creditors into an ultra-cautious mode. Put explicitly, lending to Jamaica has become risky and expensive.
There is no need to debate whether or not the administration has explained what the prescription to our economic solutions would involve. Concerns as to whether it has been said often enough are valid in so far as some persons are genuinely of the view that they have not heard it frequently; or wanted to hear the specifics.
That we need to "move the primary surplus to 7.5 per cent of GDP" may not have translated explicitly enough that new revenue measures (including taxation) would have to be contemplated. Maybe that is the source of the 'surprise' which many claim they felt when new revenue measures were announced in Parliament on Tuesday, February 12, and which led National Security Minister Peter Bunting to recently quip that he was "perplexed" as to why so many people are saying that they are shocked.
A similar view may be held regarding the general understanding of the finance minister's frequent remarks regarding the fact that the global credit community was basically closed to Jamaica until and unless it became demonstrably clear that we were willing to take the necessary and hard measures to curb our appetite for debt.
We must show we are serious in honouring our debt obligations, reducing our debt from 140 per cent of GDP towards the ideal 65 per cent and securing the imprimatur of the IMF.
A number of mileposts had to be passed. The National Debt Exchange, the new revenue measures, and passing of critical legislation are some. Last Friday, the IMF announced it had reached a staff-level agreement with the Jamaican authorities on the key elements of an economic programme that can be supported by a four-year arrangement under the extended fund facility (EFF).
All our problems are not yet over. It is but another milepost in a very long journey to recovery. The key elements referred to will constitute the economic and financial regime to which the entire society must commit.
The recovery regime includes paying more for what we need as a nation with our own money (taxes). Examples of these steps include the increase in the education tax, which must now go directly to financing the Students' Loan Bureau, as well as the use of funds from the NHT.
As a member of the Public Administration and Appropriations Committee (PAAC) of Parliament, I am particularly pleased about education tax increase for the stated purpose. The PAAC has been presented with the stark reality that the SLB cannot meet the increasing demand to finance tertiary education through loans.
The education tax support is helpful, but that alone is not enough. There are other models for assisting students to finance their tertiary education that will have to be contemplated and introduced.
The second example is the bold but contentious issue of utilising portions of the NHT funds to create fiscal space and achieve the prior-action environment for the EFF from the IMF. Naturally, concerns have, and will, be raised as to the ability of the NHT to underwrite this investment in the national recovery programme. The health of the NHT must, and will, be monitored closely and the nation is correct in ensuring that this is done.
The fact that the NHT, however, has accumulated significant resources points to the ability through sensible taxation and the setting up of special-purpose funds in the first place. The management of these funds and allocating resources to address national needs are to be better coordinated under a Central Treasury Management System which, if properly implemented, should see Government having better sight of, oversight for, and improved capacity to better allocate the state's limited resources towards economic and social development.
The recovery regime also requires a cultural and educational shift among consumers. More of us need to appreciate that when we purchase imported items instead of locally grown or produced items, we contribute to the strength of the US dollar to the detriment of our own. The appetite for imported products (including spring water) must be replaced with a commitment by importers, led by more educated and activist consumers, to invest in companies and processes to provide local commodities.
Our Government must also be more direct in how we communicate, do it more purposefully, more frequently with greater transparency and participation. Those are non-negotiable elements to achieving a more aware citizenry who understand the role and responsibility of the individual as a unit of the society and the economy in the national recovery programme.
It means that we must pay all our taxes that are due and to do so when they become due. Collectors of GCT must be reminded forcibly that they are custodians of government money, which is paid directly to them by consumers and clients.
Boost productivityGovernment must be more responsible in how it carries out its function. Again, I applaud the recommendation by the PAAC to have established a better coordinating mechanism that properly plans and sequences the various stages of project implementation across government.
Indeed, the finance minister has made this a key element of the economic-reform agenda. Better performance and greater productivity are now mandatory. A key part of the recovery is how we each operate as individuals and as leaders at the various levels in which we function.
This includes helping to manage expectation at the constituency and community levels. That has now to become an even more critical aspect of our role as members of parliament. To boldly communicate to constituents that cutting expenditure means less money for programmes (such as bush clearing) for which there is a paternalistic expectation. Or if and when those programmes can be funded, they must be carried out properly and linked to objectives such as disaster mitigation and vector control to enhance social health and well-being.
These are not easy times for anyone. This moment in our development calls on all of us to accept a significant amount of personal pain to secure and ensure the national gain. The temptation will be high for opportunistic politicking, which is the easiest thing to do. But we have done the easy for too long; now let us do the necessary.
Raymond Pryce is MP of North East St Elizabeth. Email feedback to firstname.lastname@example.org and email@example.com.