Sun | Jan 23, 2022

Aubyn Hill | Greece to Jamaica: Grow your economy

Published:Thursday | July 16, 2015 | 9:53 AM

MANY IN Jamaica have been writing and commenting on the lessons Jamaica can learn from the ongoing political and economic tragi-drama that Alexis Tsipras and Greece have been engaged in with their northern European Eurozone partners.

Poverty-stricken Greeks and their impoverished and debt-laden country were trying to stand up against their much richer and powerful northern counterparts.

With just about two per cent of the GDP of the group, Greece, with its very leftist prime minister and his really socialist party, never stood a chance of bullying its neighbours into agreeing to immediate debt forgiveness.

Debt forgiveness will have to come. Greece simply cannot pay back that enormous mountain of debt.

Before that, however, Tsipras and the 61.5 per cent of the Greek population who voted no to more austerity and yes to stay in the Eurozone, had to be humiliated and put in their places. The international humiliation had to be applied less similar leftist upstarts in countries like Spain, Portugal and maybe even Italy get such silly ideas in their heads.

Pablo Iglesias of Spain's left-wing Podemos, who is also a member of the European Parliament (MEP), comes to mind. Tsipras got a solid lesson in realpolitik and how power works.

Whatever else Jamaica must learn from Greece, it is the clear lesson that to avoid Greece's fate, our country's economy must grow robustly - not by some fractional decimal rate that looks more like a statistical error. Excuses for poor or no growth need to be robustly rebuffed.



Since 2009, Greece has had five different prime ministers and they were all considerably to the right of Alexis Tsipras. The four predecessors to Tsipras followed the dictates and dictats of the International Monetary Fund, the European Commission (EC) and the European Central Bank (ECB).

That obedience led to a 25 per cent shrinking of the Greek economy and more than 5,000 suicides by Greek persons who simply could not pay their mortgages, health care, food or similar ordinary living expenses. National unemployment figure climbed above 25 per cent, and that austerity led to the current youth unemployment level of 62 per cent.

By the time Mr Samaras called the general election on December 29, 2014, Greeks were very ready to vote for Mr Tsipras and strongly against continued austerity and the troika. This was an austerity engineered by the troika and the other 18 Eurozone countries behind them. Perennial and excessive Greek borrowing precipitated the troika's interference.

What is most interesting is the IMF's evolving position on forgiveness of 'unsustainable' Greek debt - sort of like President Obama's on same-sex marriage.

No public mention was made of the unsustainability or consideration of forgiveness of Greek debt in any of the two previous and now proved-to-be-unsustainable bailout programmes. Indeed, the International Monetary Fund (IMF) joined the hard pushback on every Tsipras request for debt forgiveness. Today, the IMF is solidly against the current 'unsustainable' bailout programme of the EC, ECB and hard-line Germany and which passed after an acrimonious debate in the Greek parliament on Wednesday.

Last week Thursday and this past Monday, the IMF released two documents making it clear that the new austerity plan its two partners have humiliatingly forced down Greek throats will not work, and massive debt forgiveness is required for Greece to get to growth and a fighting chance.

The IMF, despised-Tsipras and the 61.5 per cent of Greeks who voted no to austerity in last Sunday's referendum are now on the same side. It is simply remarkable.


Those who unequivocally support the Jamaican Government's near no-growth performance over the past three years point to how great the administration has done to pass eight IMF tests. This writer joined in giving kudos to Finance Minister Dr Peter Phillips for pushing the IMF deal through what was a reluctant Cabinet, and standing almost alone in the early days after signing the Extended Fund Facility (EFF) in May 2013. I have taken issue with parts of the deal, such as the exclusively Jamaican-high primary surplus rate of 7.5 per cent.

But also from the very early days of this administration, I and others have pushed for a clear economic growth and employment plan and its implementation. My contention was, and is, that it was not mutually exclusive to Peter Phillips' fiscal consolidation programme and that without such a growth plan, poverty and economic hardship would increase and personal and national prosperity would disappear.

Having been under an IMF, EC and ECB austerity programme for five years, the Greek people have watched their standard of living fall and fall while millions just get progressively poorer. So have very many Jamaicans.

So to hear the IMF's new position on Greece's 'unsustainable' debt burden and the need for debt forgiveness must make those staunch supporters of the infallibility of the IMF-devised and Jamaica Government-agreed EFF programme begin to stop and wonder. Was it not always clear that Jamaica's debt burden might be unmanageable?

Economist Dr AndrÈ Haughton wrote in The Gleaner last week that: "The situation in Jamaica is even worse because debt is serviced at a higher rate than Greece. Jamaica will forever be indebted to creditors no matter how hard the people work."

Over 30 per cent of Jamaica's total expenditure was for interest payments in 2014.

Was it not always very obvious that the 7.5 per cent primary surplus was too high - in other words, that the payback period for our enormous debt was too short? It should be very clear to all that the IMF is not infallible, and it does evolve!

Aubyn Hill is CEO of Corporate Strategies Ltd and chairman of the Economic Advisory Council of the opposition leader.


Twitter: @hillaubyn