PNP should shoulder blame for state of Ja's economy
THE EDITOR, Sir:
Populist politics should have no place in a serious Budget Debate, yet Dr Peter Phillips' presentation on June 6, 2012 was just that. Dr Phillips spent over an hour criticising the former administration and even erroneously stated that the Labour Party should be blamed for the country's current situation.
Jamaica's woes began in the 1970s. During the 1950s and '60s, the economy experienced rapid growth from foreign direct investment and the development of the bauxite industry. The annual growth rate during the 1950s and '60s was more than three per cent. The manufacturing sector expanded 11.3 per cent in 1950 to 12.8 per cent in 1960 and 15 per cent in 1970.
Jamaica's economy had begun to decline during the administration of Michael Manley, starting in 1972. A global oil shock quadrupled fuel prices. Therefore, Jamaica's oil import bill increase by 172 per cent between 1972 and '74.
In addition to this, the People's National Party's (PNP) policies contributed to negative growth. Unlike other small Caribbean states, the PNP proposed very expansionary fiscal policies during a period of serious inflation and recession. Government spending on badly needed social programmes expanded more rapidly than revenues. This created chronic budget deficits which were increasingly financed by external loans.
Those polices caused the economy to contract by 25 per cent, and by 1980 external debt was as high as 82 per cent of GDP. During the 1980s, the economy experienced declining growth rates. However, by 1986, the economy experienced an upswing. During the PNP's reign in the 1990s, the economy had contracted, while the world economy was expanding. In addition to this, FINSAC'S policies led to the collapse of more than 40,000 businesses. According to the World Bank, Jamaica became one of the most indebted countries in the world in the 1990s.
The Economics Intelligence Unit had reported in 1999 that the world economy was expected to expand by the year 2000; however, Jamaica's economy was expected to contract. Furthermore, programmes like Operation PRIDE and NetServ caused multimillion-dollar hit.
During the PNP's 181/2 years in power, there were several scandals which incurred billions of dollars in losses. Therefore, the PNP, more than any other political party, should be blamed for the country's current state.