Sun | Aug 14, 2022

Aubyn Hill │ Poor suffers, rich praises Government

Published:Wednesday | August 26, 2015 | 9:34 PM

In the 'austerity will lead to growth' programme that the Jamaican Government has been selling and sticking to for the last three to four years, there have been clear winners and losers.

One set of winners has been those individuals and businesses who have secured contracts from the Government. Another is the financial houses - foreign and local - that have been protected with the increasing, and increasingly excruciating, taxes heaped on ordinary Jamaicans to fund the repayment of government loans which some lenders may have imprudently made in the first place.

The losers, the poor, have been and are encouraged to believe in and have faith in the Government that has been taxing them into painful poverty, while the winners have been heaping fulsome praises on the Government, sometimes quite shamelessly.

Those who highlight the suffering and plight of ordinary Jamaicans, and dare to suggest that more and more persons are joining the ranks of the poor, are berated for 'dwelling on the negative', as if the Government doesn't have enough publicity organs and spokespersons under its control to shout its 'positives'.

In any event, the Government will never willingly come forward and tell the details of the brutal effects of its taxes and government non-payment hardships it has imposed on citizens in order to pass nine IMF quarterly tests, and to hold on to the ill-advised and extraordinarily high 7.5 per cent primary surplus target.

Sensible observers rightly pointed out - from very early after the Extended Fund Facility (EFF) programme was agreed with the IMF - that austerity alone would not work. They made it clear that a robust growth-facilitation plan must be initiated by the Government in order to have the private sector create the revenues to pay and ease the employment hardships on the Jamaican people.

The know-it-all economic managers in the Government, who have never done economic growth before, pooh-poohed the idea and paid it scant regard.

Now we are well into our fourth year under this Portia Simpson Miller-Peter Phillips administration without recording any reasonable real economic growth.


One of the pluses which Finance Minister Dr Peter Phillips has been highlighting - listening to him there are no downsides - after he booked that relatively expensive bond transaction a few weeks ago, is the fact that he borrowed enough money to make the NDX payment in February next year.

Two sets of winners from the bond deal shouted high praises to the minister for being able to borrow more high-interest rate money to retire the very low, one per cent interest rate PetroCaribe debt.

First, the bond-arranging and -underwriting financial houses laughed all the way to their banks to get those kinds of fees and an average seven-per-cent-plus interest rate in this really low interest rate marketplace, and from a sovereign borrower over which the IMF holds a tight reign and a big stick.

The second set of winners is the local financial institutions, especially the smaller ones, who will benefit from the NDX payout.

And who are the losers? They are many but they do not have the united and powerful voices of the institutions or the well-connected. They are poor mothers and fathers across the country, who cannot buy back-to-school necessities for their children because they have no jobs and so can't even borrow any cash.

Farmers in St Elizabeth, Manchester and elsewhere, who have absolutely no cash because the little they had was used up months ago to buy water to grow cash crops, are also losers.

Unfortunately for them, when, say, the tomato harvest came, there was no market for their farm produce.

Normally, when there is a prolonged drought, like we have had, the selling prices for vegetables increase. So what happened this time to force a female farmer in South East St Elizabeth - one that I'm aware of - to lose many tens of thousands of dollars because she could find no market for her watered-by-hand tomatoes? Did we import too many, or was demand so low because disposable income is generally meagre or non-existent?

Her grief is repeated in similar forms among many farmers.


So while the bond underwriters rejoiced and joined others in praising the Government for its 'game-changer' deal, one that wise observers know is no game changer at all, ordinary people who pay taxes could not get water - some for weeks.

Some health facilities may even have faced hygiene risks because of the severe water shortage caused by grievous government mismanagement in some cases.

If the Government does not get the private sector to buy into a growth-facilitation strategy that it is yet to craft, we can fairly expect more Jamaicans to slip into poverty.

The EFF, via the IMF, will not bring prosperity to other than a privileged few.

The Government's debt-consolidation programme will continue to spread poverty - prosperity it will not bring. And poverty is breeding a terrible legacy among us.

Last Tuesday evening, two men were gunned down, execution-style, in the Grants Pen area. Regrettably, that kind of brutal killing of our young people is an almost common occurrence these days.

Trace the murders back to their root causes and poverty - and probably unemployment - will be prominent among them.

Without the arrival of substantial and sustained economic growth, poverty and its attendant carnage and other society-destroying practices, will grow and spread.

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


Twitter: @hillaubyn