Sun | Jun 20, 2021

EDITORIAL - Time for Mrs Simpson Miller to bat

Published:Wednesday | April 4, 2012 | 12:00 AM

THE CABINET should have spent the last two days crafting the broad parameters of the Budget that the finance minister, Dr Peter Phillips, is to reveal next month. If the Government is serious about tackling the country's fiscal crisis, what emerged is unlikely to have been pretty.

But enough is not being done politically to convince Jamaicans about the depth of the problem, especially by the person most competent to do so, the universally popular prime minister, Mrs Portia Simpson Miller. That job, it seems, is being left entirely to the finance minister, Dr Peter Phillips.

Yet, the Government is likely to have to bring a big tax package, larger than what was contemplated when he assumed the job in January.

The politically unkind interpret Prime Minister Simpson Miller's posture as a sort of leaving Dr Phillips to the wolves, if they come out, while providing the PM with plausible deniability. If austerity measures are implemented and they work, success belongs to the Government. But public rejection and/or failure are owned by Dr Phillips - the consequence of lingering mistrust and payback for Dr Phillips having challenged Mrs Simpson Miller for the leadership of the People's National Party (PNP).

This newspaper, however, does not embrace such cynicism, or harbour Machiavellian perceptions of the prime minister. We, however, believe that it is in the strategic interest of the administration, and the good of Jamaica that Mrs Simpson Miller spend some of her political capital on this matter.

As the prime minister knows, Jamaica's J$1.6-trillion debt, more than 130 per cent of gross domestic product, is unsustainable. The Government does not collect enough revenue to service the debt and meet its other expenses.

At the same time, it is harder and more expensive for Jamaica to borrow than in the past, and another rescheduling, similar to what was done with domestic bonds in 2010, is hardly on the cards.

There are obviously hard decisions to be taken. Or, they are postponed at Jamaica's peril.

Indeed, the International Monetary Fund has made the reform of the tax and pension systems, as well as the arrangements for public-sector pensions, as areas in which the Government must show significant progress if it is to obtain the Fund's imprimatur to unlock credit support from international partners.

Political risk

Some of these measures, including the tax-reform proposals, articulated by both the Government and the private sector, will be painful and are politically risky. The logically coherent measures articulated by the Private Sector Working Group presumes a net gain of J$7.3 billion if implemented in its entirety.

But given the widening fiscal gap, exemplified in part by Dr Phillips' recent budget supplementary estimates, even the private-sector projected amounts would be insufficient to fund obligations. A $13-billion shortfall in projected revenue will complicate matter, especially if the Government fails to take the appropriate action.

In this regard, leadership matters. In this case, Mrs Simpson Miller's.

At the height of the Greek crisis, the then prime minister, George Papandreou, didn't leave selling austerity only to the finance minister. He was on the front line telling Greeks about the hard choices they faced. In Spain, that country's prime minister, Mariano Rajoy, is doing the same.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.