EDITORIAL - Poor economics, sovereign impotence

Published: Monday | February 18, 2013 Comments 0

Peter Phillips' public admission twice last week - of sovereign impotence in negotiating an economic support agreement with the International Monetary Fund (IMF) - should be powerful motivation for us to finally fix Jamaica's economy.

Further, the shame of the circumstance should be another reminder of the need for, if not a catalyst towards, change in our overly divisive and tribalist political discourse.

Never again should Dr Phillips be cowed from bringing to the sovereign Parliament information he feels to be of relevance to the Jamaican people which could advance their understanding of policy and enhance the quality of governance.

For that, when the matter is stripped to its core, is what happened with regard to the J$15.9-billion tax package the finance minister introduced as prior actions for achieving the US$750-million agreement with the IMF.

This newspaper, like the Opposition, whose walkout of Parliament we did not support, would have preferred if Dr Phillips' tax proposals had been put, ahead of time, before legislators and other stakeholders for analysis and debate.

Indeed, this was an approach recommended by the Moses Committee and supported by the Patterson administration in the wake of the late 1990s riots to protest a hike in petroleum prices.

It is, unfortunately, a process that has not been seriously engaged by Jamaican finance ministers, but which Dr Phillips says he supports and wanted to use with his latest tax package - but for his dissuasion by, if not the resistance of, the IMF negotiators.

Both in Parliament last Tuesday and at a press conference two days later, Dr Phillips argued that it was his wish to "create a more realistic understanding in the public domain about the realities of financing a Budget".

"We made the case," Dr Phillips told journalists.

He added: "The answer, essentially, was ... if you want an agreement, what you need to do is to define the measures now, otherwise, to quote an official, 'All we would have is an agreement to disagree later on about tax measures.'

"That was not a way in which our interlocutors were prepared to approach the question ... . That is the price we pay for allowing our affairs to run away from us."

Dr Phillips is, of course, right.

DEAD-END DECISION

It is true that as a minister of government of a sovereign country, there was no legal constraint on him to act in acquiescence to any IMF official. It might even be argued, with logic, that if Dr Phillips and his boss, Prime Minister Portia Simpson Miller, were convinced of the rightness of this course, they would have resisted what we might euphemistically refer to as 'advice' from the IMF.

But the Government is faced with two powerful and immediate constraints: first, Jamaica is broke and in need of an IMF deal in order to meet its obligations; second, faced with bond maturities this month, it needed to act in a hurry.

Further, as unpalatable as this fact is, we, too, often do not practise our politics with the maturity expected of a serious and sovereign state. The government side expected cheap political hay would have been made of the tax issue, as would likely be the case, too, if the roles were reversed.

But the larger issue is how, through bad economics, we squandered our sovereignty. It is urgent that we grab it back before more liberty is taken.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.

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