IMF should do more for us

Published: Monday | February 18, 2013 Comments 0

By Garth A. Rattray

After more than one year in office, the Government appears to be closing in on an agreement with the International Monetary Fund (IMF). However, as expected, this comes at a very high price.

As pointed out in The Gleaner (February 12, 2013), the Government has been forced to take "extraordinary measures with the urgency that the situation demands". These include embarking on a second debt-exchange programme and stretching out the maturity date from 4.5 to 8.9 years.

It is expected that this will achieve a "reduction of our debt-to-gross domestic product (GDP) ratio by 8.5 per cent, or around $17 billion per year between now and 2020". Although obviously unavoidable, this "measure" will no doubt call for extreme personal sacrifice from many citizens and further weaken confidence in the Government's fiduciary skills. It will dilute many long-term investment systems designed to secure retirement funds for ageing Jamaicans.

There will also be another raiding of the National Housing Trust (NHT), this time to the tune of $11 billion per year throughout the life of the new IMF agreement. Efforts were made to assuage our fears that such a severe depletion of NHT funds would not have serious repercussions on that entity's ability to carry out its original mandate and to assist with low-interest loans, but most persons remain sceptical.

Ostensibly, since skimming off $11 billion annually will not dent the NHT, it makes us wonder why that (apparent excess money) was never used to relocate those people residing on gully sides and riverbanks. It would save many homes, lives, avoid tons of debris being dumped in our drainage system and rivers, and reduce the crime spawned by such depressed and unregulated communities. Isn't that what the NHT was supposed to be about?

Then there is the $16-billion raft of new taxes: general consumption tax changes, increased stamp duty, more 'education tax' (that goes into the Consolidated Fund), increased income taxes and trade (border) tax measures, but no 'measures' to promote production for export.

Over the years, several things have kept our economy afloat. The main source of foreign exchange income was once sugar cane, then bauxite, then tourism, then remittances. At one time, in the not-too-distant past, it was even rumoured that our economy was being buoyed by the illicit marijuana trade. Now, we import far more goods than we export. And therein lies the problem.

Jamaica is somewhat of a paradox and an enigma. We are a poor country with many rich and wealthy people, yet our coffers are wanting.

ENTREPRENEURSHIP DEFICIT

Be that as it may, the Government is severely cash-strapped because of the uneven distribution of wealth, because we are heavy energy users, because politics trumps everything, and because we have many entrepreneurs who spend millions of precious US dollars to import goods and then retail them here or use the goods to produce for local consumption. We need entrepreneurs who are willing and able to export to earn US dollars.

This is where I believe the IMF should do more for us. Such a globally powerful organisation should be able to use its networking capabilities to provide borrowing nations with the ways and means to produce for export so that they can claw their way out of debt and stay out of it, instead of having to return repeatedly for assistance.

Sure, we dug this deep and slippery hole, but such stringent financial prerequisites will trigger some people's 'survival mode' and lead to local and international crime (by way of illicit activities).

Additionally, we will inadvertently export criminality when our young, disenfranchised and desperate youth migrate to the greener pastures of the developed countries. Ensuring long-term and sustainable success will bode well for Jamaica, the IMF, and international stability.

Garth A. Rattray is a medical doctor with a family practice. Email feedback to columns@gleanerjm.com and garthrattray@gmail.com.

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