EDITORIAL - Holding Phillips to his word
We appreciate the pressure that is perhaps being felt by Peter Phillips, the finance minister, in the face of recent bad political news. Yet, he continues to say, and up to now do, the right things.
The most recent declaration of assurance from Dr Phillips was in Parliament last week when he updated the House on the current state of the Government's finances. For the first four months of the fiscal year, up to end of July, he said, revenue collection was 2.1 per cent behind projection, which he hoped would be remedied by more aggressive collection of taxes by duties by the relevant agencies.
"Should these compliance measures not compensate for the shortfall in revenue," Dr Phillips said, "the necessary cuts will have to be made to ensure that the current economic reform programme remains on track."
Indeed, this is what Dr Phillips has done in the past to ensure that he meets the target under Jamaica's agreement with the International Monetary Fund (IMF), of a primary surplus of 7.5 per cent of gross domestic product (GDP). That is a hard challenge. But that is what is required if Jamaica is to maintain the gains of reducing, relative to the size of its economy, its debt that now stands at nearly 140 per cent of GDP.
Any cut in government spending is, of itself, contractionary. It is far more painful in the absence of robust investment by the private sector to drive job creation and growth, which, while improving, remains largely the case in Jamaica. These concerns will be exacerbated by the existing political circumstances.
Municipal elections are likely to take place within six months, and will be seen as a dress rehearsal for the national poll by the end of 2016. A recent opinion survey says that three-quarters of Jamaicans believe that the country is heading in the wrong direction and that the popularity of the charismatic prime minister, Portia Simpson Miller, has slipped by more than a quarter - 29 per cent. Dr Phillips himself lags behind the shadow finance minister, Audley Shaw, in popular endorsement, and although the support for either side remains low, the Opposition leads the governing party in voter support.
In the circumstance, the administration may be tempted to do the wrong and easy thing of relaxing on the economic levers.
Happily, in that economic report to Parliament, Dr Phillips declared the Government's intention to continue the programme and "not abandon what we started". We assume he delivered that message, assured by the backing of Prime Minister Simpson Miller.
They have results to support that posture. For the first in a long time, Jamaica will this fiscal year balance its Budget. The economy has achieved four consecutive quarters of growth, and unemployment, though still unacceptably high at 13 per cent, has fallen by three percentage points. Inflation remains in single digit. This is happening despite a still tentative private sector and consumers who remain uncertain about the future.
The larger point is that for rescuing the Jamaican economy, there is no other game in town. If the Opposition has an easier and better path, apart from tinkering at the edges, it should put it on display. But Dr Phillips should know that we will hold him to his word and call him out if he reneges on his pledges and abandons the policies that remain the best hope for Jamaica.
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