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EDITORIAL - Mr Holness' economic council

Published:Wednesday | August 27, 2014 | 12:00 AM

Our criticisms of his intended protest notwithstanding, the demonstration Andrew Holness led on Monday against bus-fare hikes was, in a way, useful. And not only because it allowed Mr Holness to assert his leadership of the Jamaica Labour Party (JLP), and some other people, to blow off steam.

More important, it was a reminder not only of the Opposition's obligation to engage in serious policy debate, but of Mr Holness' recent implicit promise to begin to roll out alternative economic strategies to those on offer by the Simpson Miller administration. That promise was contained in Mr Holness' promulgation, two months ago, of an economic advisory council, led by banker Aubyn Hill.

At Monday's morning's rally in Half-Way Tree, Mr Holness and several of his lieutenants characterised the increases, of up to 100 per cent, by the state-owned Jamaica Urban Transit Company (JUTC) as a wicked act of an uncaring Government more inclined to meet fiscal and other targets established by the International Monetary Fund (IMF) than the needs of the Jamaican people.

Like other critics of the Government, they highlighted, too, the freeze of public-sector wages that is to continue into 2016 and the more than 20 per cent depreciation of the Jamaican dollar over the past year.

Influence of Mr Hill's group

It is against this backdrop that we look forward to the influence of Mr Hill's group - perchance what happened at Half-Way Tree was ahead of absorption of their initiatives - on the thinking of Mr Holness and his finance spokesman, Audley Shaw. Indeed, the austerity that the Simpson Miller administration is being forced to undertake as part of its economic reform agreement with the IMF is being driven by the country's debt that not so long ago was hovering at 150 per cent of gross domestic product, making Jamaica one of the world's most highly indebted nations.

Our debt overhang, and a broader mismanagement of the country's finances, one side of the debate goes, contributed to Jamaica's four decades of extremely weak economic growth. There are few alternatives available to the Government but tough action to bring the debt under control.

Reflexive Keynesians

There, though, are the reflexive Keynesians who insist on the need for the Government to engage in stimulus spending, but without, in so far as this newspaper is aware, providing the source, outside the context of an IMF agreement, of the capital for such state interventions without engaging in a new high-cost borrowing binge. But there may be strategies by which, for instance, the Government can cap bus fares; improve the JUTC's service standards; invest billions in rolling stock; provide J$2 billion in subsidies and cover an annual loss of another $2 billion; meet its obligations to other services while running surpluses that go to paying down the debt.

We are sure that Mr Hill and his colleagues have thought about these issues, as well as the economic efficacy, especially in the context of Jamaica's situation, of the depreciation of the Jamaican dollar. Mr Shaw and Mr Holness have argued that devaluation is bad. They would prefer a fixed exchange rate.

September is a symbolic month of beginnings. Schools reopen. Enterprises seek to regenerate after the lull of the summer holidays. Mr Holness might want to do the same by unveiling the first set of policies from his economic council.

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