We believe that Chris Zacca, the president of the Private Sector Organisation of Jamaica (PSOJ), has set his sights on the wrong target. His focus should be on inducing supporting action from his members.
Our reference here is to Mr Zacca's observation, reported by this newspaper last Friday about the government's overperformance, so far, on its fiscal targets, under its agreement with the International Monetary Fund (IMF) and the dangers that he implies that this could hold for the economy.
To be fair to Mr Zacca, he acknowledged the discipline that was required by the finance ministry to accomplish what was achieved in the first quarterly test:
A primary surplus that was 23 per cent better than required; and
An overall balance that was better by 71 per cent than the IMF asked.
But as we previously noted in these columns, with this Government's revenue being nearly $1 billion below project for the first three months of the fiscal year, it achieved this return by spending J$5.6 billion, or six per cent, less than it planned. More than 40 per cent of the savings - $2.3 billion - came from a 21 per cent underspending on the capital budget.
This, apparently, is what concerns Mr Zacca. Although not explicitly stated, he fears that this performance, if continued, will lead to a further diminution of public-sector consumption, driving the economy deeper into recession.
Mr Zacca has half a point. After all, the economy has been through five consecutive quarters of negative growth, including a 0.4 per cent contraction in the quarter to the end of June. Official unemployment is at a decade high of 16.3 per cent.
This brings us to the point of unease with Mr Zacca and our concern about the signal that he may, unintentionally, send about to whom people should look for economic growth. That can't, in the current circumstances, be the Government.
Indeed, it is past government misbehaviour, spending much more than it earned and borrowing to pay the bill, that is the basis of Jamaica's economic crisis. Jamaica's debt of J$1.8 trillion is around 150 per cent of GDP, which puts it in the same stratosphere as Greece. More than 40 per cent of the Government's budget and half its revenue go to servicing the debt. All the revenue it collects is not sufficient to service the debt and pay government workers.
So, it is good that the Government borrows less and pays back more to lower the debt. That should also leave more resources with the banks for the private sector to invest to generate growth and create jobs.
We would suggest to Mr Zacca, therefore, that he picks up on a point made in a document we believe he helped to draft. It was issued by the public-private sector committee, of which he is member, which monitors the Government's programme with the IMF.
The committee was concerned that "sections of the private sector remain sceptical" that the IMF programme will succeed, despite the promising start. We suspect that this is, in part, based on an absence of confidence in the Government to do the difficult things.
We can look to no Keynesian interventions by the Government. The Government must be as tough as it needs be while private enterprise picks up the slack.
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