EDITORIAL - Economy must be election talking point

There may have been mild disagreements over degree, but there could be no question about the consensus among academics and societal leaders, who discussed the matter at The Gleaner's headquarters last Friday that Jamaica's economy is in crisis.

It is also the common position that Jamaica can still be rescued, but with two critical warnings:

That the medicine necessary for recovery will be bitter and unlikely to be welcomed by the society; and

That whichever party forms the government after the next general election, or even before, will have to immediately get on with the job of administering the brew.

Alternatively, the country, even if it does not quite deny the severity of the illness, could continue on palliatives which, while providing short-term relief, won't halt a terminal decline.

"I am convinced that with appropriate policy decisions and with appropriate support, we can make significant changes," said Professor Alvin Wint, an economist at the University of the West Indies (UWI), Mona.

Dr Damien King, another economist, agrees that "options do exist".

Crisis graver than many think

Indeed, they do. The concern of this newspaper, though, is despite the acknowledgement by Prime Minister Andrew Holness of the country's difficulties, neither problems nor solutions are being discussed with the necessary intensity, either by his Jamaica Labour Party (JLP) or the People's National Party (PNP).

This crisis is reflected in the country's debt, which at the end of August registered one thousand, six hundred thousand million dollars ($1.6 trillion), which was $86 billion higher than it was at the end of December 2010. Or, the debt, during the first eight months of this year, rose by more than $200 million a day.

In 2010-2011, debt payments consumed two thirds of all the money earned by the Government in taxes and grants from other countries. The $84 billion left over was enough to pay public-sector employees only two thirds of their wages. The Government had to borrow to make up those wages and to meet its other expenses.

Skirting around core issues

The Government's accounted-for debt is 30 per cent more than the value of goods and services produced in the country, and the gap between what the Government earns and spends is around eight per cent of national production. In other countries with such imbalances in government finances and which failed to tackle the crisis - such as Greece and Italy - the financial markets lost confidence, causing them to either stop lending or impose borrowing penalties. Those countries were eventually forced to impose harsh austerity measures, their governments collapsed, and were replaced by technocratic administrations.

Despite the warnings from the International Monetary Fund and debt-rating agencies, our political parties continue to skirt around the Jamaican crisis and refuse to plainly tell voters what the options are and what they will mean.

Clearly, public-sector reform must include job cuts. Younger workers and new recruits to the public sector cannot expect to enjoy the same level of benefits or not having to contribute to their pensions. Government will have to collect more taxes, preferably from those who have, in the past, escaped. It has to acknowledge that some services are no longer affordable. Leaders have to accept that they have, in the past, wasted the people's resources and must undertake to do better.

That is the kind of frank conversation that is yet to begin in this election campaign.