First anniversary Has Golding delivered?

[Lazie]

published: Sunday | September 7, 2008

Ian Boyne

The day passed without any fanfare by the Jamaica Labour Party (JLP), and its leader in his live monthly radio broadcast did not even mention it in his lengthy introduction. Yet, September 3 was such a momentous day for the JLP last year - marking the end of its 18-year sojourn in the political wilderness.
Prime Minister Golding spent his time talking about the Gustav floods rather than the ending of his party's drought in that Jamaica House Live call-in show last Wednesday. And even when many callers congratulated him on the anniversary of his victory after a masterly fought and brilliant campaign, Golding just politely said "thank you", without any elaboration.
His only elaboration came when he noted that some people were commenting on the first anniversary while his thinking was, 'If I am committed to running the marathon, why should I stop at the 200 yards to give an assessment?'
Cynics would say his lack of public celebration was appropriate, as he and his party have little to crow about after one year in office. Indeed, there are some who point out that in some key areas on which the JLP campaigned, things have worsened.

Financial journalist Ralston Hyman is one such person. A news report on Power 106 quoted Hyman as saying that "Golding assumed the reins of power promising more jobs, a reduction of interest rates to single digit and low inflation, while the latest figures show that the Government has missed all these indicators."
In an article in the August 31-September 6 Sunday Herald, ('Not a good first year for the JLP'), perhaps written by Hyman, its Financial Editor, reference is made to the recent Planning Institute of Jamaica report which showed that the economy experienced anaemic growth in the first quarter and then declined in the second quarter, resulting in zero economic growth during the first half of the year.
The paper also said, "Unemployment stood at a four-year high at 12 per cent in April." The partisans will have a field day with statistics like these, noting that Golding came to power on the promise of jobs, jobs jobs. And with regard to the country's number one problem, crime and violence, not even the most ardent supporter of the JLP would argue any success there, to make the understatement of the year.
So, in the most critical areas - crime,employment and the cost of living - there would be widespread disappointment with the first year of the JLP's being in office.
The fact that there is disappointment, however, does not automatically translate into blame. Quite a number of people recognise that external factors have strongly impinged on the JLP government's performance over the year, and many think it is unreasonable to judge the party too harshly in so short a time. Many go on to say that with "PNP mismanagement and corruption over the last 18 years", it will take some time for 'The Driver' to steady the economic vehicle and really rev it up. The Driver, they feel, is at least going in the right direction.
global economy
Others are not as forgiving. They say that the JLP campaigned heavily on a certain platform, inflated people's expectations, trivialised the country's problems, and now that they have state power they must come up with the solutions rather than blame the global economy for the problems. The debate will go on and the partisans will seek to score points in their dialogue of the deaf. But for those who are tired of their ceaseless games, there are other approaches which have to be taken.
The sub-prime crisis in the US housing market, the spike in global commodity prices, including food and oil, and the resulting global economic crisis which have significantly affected economic outcomes here can teach us some valuable lessons. Anyone who has been reading me consistently will attest to the fact that I constantly chide local commentators, particularly the financial analysts, for their general failure to factor in the impact of the global economy.
In the national debates organised by the Debates Commission before the last general election, I noted that no journalist on any of the panels raised any issue relating to the global economy and its possible impact on the policies and potential performance of the parties. I used to caution the JLP strongly about its propaganda line about the PNP wrecking the economy, and the attacks on Omar Davies, pointing out incessantly that this small, open economy has far less resilience than we ascribe to it.
I can't count the number of times I have pointed out that the economic problems of the 18 years of the PNP administration were not just due to PNP corruption, inefficiencies and mismanagement. It had nothing to do with Omar Davies' 'wickedness', lack of technical competence or good intentions. Our economy has always been influenced by factors beyond our control. Now that the JLP has experienced what I warned them about, a golden opportunity (no pun intended) exists for us, as a society, to develop some consensus on some critical economic issues and to downplay the propaganda. Now, of course, it is the PNP whom we have to lecture, as they now find it hard to resist the temptation to ignore the global factors and to say "it's Golding's fault".
realistic expectations
But what we must develop in this country is an independent, intellectually robust third force which critiques the two parties, highlights their fallacies and educates the public about realistic expectations. This is a difficult but necessary job and the media must undertake it, in addition to interest groups and independent think tanks which must emerge with a potent voice.
The time has come for us to face the fact that there is no magic wand; there is no Mighty Deliverer to lead us to the Promised Land; no single Enlightened One to lead us to Nirvana. There is no political Messiah to save us. The people most come to understand this. Political leaders should help, but when one considers self-interests, it might be naive to depend on them to do so.
It is in the interest of the PNP to tell us what a disaster the JLP has been, how it has bungled its first year in office; how it failed to deliver on its election promises and how it has heaped hardships on poor people who now can't even afford chicken back. Just as the JLP campaigned against them, convincing the majority of the country that a JLP government could make all the difference; they could create the jobs, rouse all the investors from their slumber in North America and Europe to rush here with their investments. They could tame the crime monster, fix our social problems, our infrastructural woes, and grow the economy, cut interest rates and lower inflation if we would just vote for them. And most people bought the line.
lofty plans
It is time for the thinking people who support the PNP to join with the thinking people who support the JLP in recognising that we do live in a globalised environment; that decisions taken in Brussels, Beijing, New York, New Delhi, Washington and Tokyo often have a greater impact than decisions taken at Jamaica House and Duke Street. And those little systems which form off the West Coast of Africa have the potential of disrupting all the lofty plans crafted by Cabinet and sanctioned in Parliament. We do have some things under our control, but increasingly in this era of globalisation, our wiggle room is limited.
This is why the issue of governance and style of leadership becomes critically important. But let us as a society agree that a high import-dependent economy like Jamaica does not have total control over interest rates, inflation rates, exchange rates and the rate of economic growth, irrespective of what the propagandists and the myopic analysts say. (I sometimes wonder why these fellows are so averse to reading serious books and economic journals.)
The Gleaner in its editorial of Wednesday ('Golding's first year - neither good nor all bad') was balanced: "But, its blunders notwithstanding, it can't be said, as some of its critics contend, that after a year in office the Jamaica Labour Party has been overly bad. It certainly is no disaster and neither, all things considered, has it performed worse than its People's National Party predecessor." The fact of the matter is, as I pointed out before the election, there is no significant difference between the economic policies of the PNP and the JLP, as both have been generally following the neoliberal model which has triumphed globally after the Cold War.
Despite the grandstanding by spokespersons from the two parties, they are basically following the same script written by the International Monetary Fund and the World Bank. It's just a matter of variation on the theme.
In social policy, I commend the JLP for its courage in abolishing tuition and health fees, thus objectively bettering the lot of the working class and poor in this country. Whatever the weaknesses still in the education system, and even with insufficiency of funding, the JLP Government has demonstrated will and resolve in giving the poor a fighting chance in two critical areas.
In foreign policy the Golding-led JLP Government has made the most significant advance of any JLP administration in history, in forging a truly independent approach. Golding has taken the JLP away from its reflexive pro-Republican, hawkish stance. His progressive approach to dealing with Cuba and Venezuela and his failure to kow-tow to the US is to be highly commended.

Golding
Golding's style of leadership is also consultative and conciliatory. He is highly respectful of public opinion and sensitive to civil society. His empowerment of the Opposition in Parliament, creation of an office for its leader, legislative reforms, including his crime initiatives, must also be commended. For the next year he must fast-track the de-garrisonisation of the society and cut the links between politics and criminality.
He must continue to build consensus in the society and provide a model of leadership which would make all Jamaicans - PNP, JLP and no P - feel assured that he genuinely has the interests of all of us at heart. Ian Boyne is a veteran journalist who may be reached at ianboyne1@yahoo.com. Feedback may also be sent to columns@gleanerjm.com.

http://www.jamaica-gleaner.com/glean...us/focus3.html

[Lazie]

The state of Jamaica's economy - how has our new govt ...

The state of Jamaica's economy - how has our new government performed?

Sunday, September 07, 2008


One year has passed since Prime Minister Bruce Golding was sworn into office, and various commentators are now arguing that based on a number of key economic measures, including growth, unemployment, inflation and interest rates, Jamaica's economic situation is significantly worse than it was one year ago, and that the new Government deserves a failing grade.
One can even add to the list of key macroeconomic variables previously mentioned by noting that the current account deficit has expanded significantly, the debt to GDP ratio remains very high and the poverty rate is likely to rise when it is next measured.
However, in measuring the current government's performance, for these commentators to simply ignore the almost unprecedented nature of the challenges the new government has faced from day one, is simply unfair. A better question to ask might be would the former government have been able to respond any better, and are there any other measures the new Government should have taken so far that it hasn't.
In a brief interview on the state of Jamaica's economy, Senator Don Wehby, Minister of State in the Ministry of Finance and Public Service, started by noting that the "world economic environment was very challenging, the worst in almost a decade". He correctly observed that the headlines of the major newspapers around the world were all about "rising inflation, lack of growth and the impact of oil prices".
Moreover, according to Senator Wehby, Jamaica's economy was very weak even before the current world recessionary climate. Over the past decade Jamaica "had not grown", and our growth prospects were additionally constrained by the fact that 54c out of every dollar goes to debt service.
Senator Wehby noted that his current focus was to "weather the storm" by "managing the fiscal" situation through "more fiscal discipline" and "tighter fiscal management". Longer term, a critical element of the strategy was comprehensive tax reform, of "both the rate and administration", whilst he was currently focussed on dealing with the contingent liabilities, namely the public bodies who are outside the government budget, by divestment where feasible and minimising the losses where it is not.
He was concerned about Jamaica's growth prospects this year, noting as an example that "one of the industries not performing as budgeted is the bauxite industry". As a consequence, "the bauxite levy is way down in comparison with budget".
Moreover, Wehby noted that "Gustav was a body blow and is going to challenge our fiscal programme." He added that the final estimate of the damage caused by Gustav was not yet complete, and the "$8 billion was a very preliminary figure".
On the positive side, Wehby noted that net international reserves were healthy at over US$2.3 billion and that the dollar had remained "relatively stable".
Whilst Wehby is concerned about our high inflation rate, he observes one of its principal drivers, the price of oil, is going down, and that this should also have an impact on the Jamaica Public Service company, in the form of lower electricity bills.
He therefore believes that inflation in the second half of the fiscal year should be much lower than the first, making the achievement of the revised fiscal year target of 15 to 17 per cent possible. He cautions however that these numbers don't include the affect of Hurricane Gustav on the inflation rate.
Finally, Wehby notes that he is going off to Ireland to study their central treasury management system, with the objective of introducing it in the 2009 fiscal year. He believes that there are "billions of dollars to be saved " from the impact of better treasury management on Jamaica's interest costs.
Assessing the Government's performance
There is no doubt that one of the current government's strongest performances so far has been in the area of fiscal management, which also happens to be the area over which they have direct control. The achievement of a fiscal deficit of 4.7 per cent of GDP for the last financial year, only a whisker above the original 4.5 per cent target and well within the revised fiscal target of 5.5 per cent of GDP, was very impressive considering that the new government also had to deal with previously unbudgeted items of two per cent of GDP last year, the costs of Hurricane Dean, and the damage to infrastructure of months of almost constant rain. The first quarter fiscal numbers were also above target as a result of the tax amnesty.
In fact, the fiscal performance resulted in almost glowing reports from the rating agencies e.g. Standard and Poor's and the IMF, which allowed Jamaica to both avoid what was a real prospect of a downgrade and to finish its external "capital market" borrowing programme with a successful new bond issue in June. It was particularly impressive that our all important "capital market access" was maintained despite our very high level of indebtedness in what can only be described as an extraordinarily tough borrowing environment for "risky" borrowers. Even more impressively, our bond issue took place after the collapse of leading US investment bank Bear Stearns, which had raised by far the most money internationally for Jamaica over the past decade.
Would the former government have done any better?
At first glance, it is therefore difficult to see what the former government could have done differently that would have had any positive impact on our admittedly very tough current economic situation. Indeed, one of the measures with the most potential to impact the economy positively in the short to medium term, comprehensive tax reform, was not sufficiently advanced by the former government to be implemented in the last budget despite the key Matalon report having been completed in October 2004, just under four years before the September 2007 election.
What can the new Government do differently?
The single most important measure the government can take to positively impact the economy is comprehensive tax reform. This will be very challenging to achieve as it requires both additional technical work and some element of societal consensus if it is to be implemented in time for the next budget. In terms of the critical need to increase both employment "jobs, jobs, jobs" and foreign exchange earnings, the industry with the biggest short term "bang for the buck" is undoubtedly tourism. Whilst that industry has done surprisingly well to date considering the very challenging international economic environment, the purchasing power of its key customer, the US consumer, is likely to continue to fall over the next several quarters, making it very challenging even to maintain the current level of tourism performance.
The single most important measure the Government can take to help our largest industry, tourism, is therefore lower air fares. If this is so, it becomes very difficult to understand why the Government would be willing to subsidise American Airlines to maintain our air lift, but unwilling to allow a new airline such as Airone to come here, using their own money, denying Jamaica both increased airlift and lower fares.

http://www.jamaicaobserver.com/magaz...ERFORMED__.asp