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Editorial
Respect due to Mr Shaw
Wednesday, March 03, 2010
Congratulations are due to Mr Audley Shaw, the embattled minister of finance, whose appointment, we'll remember, was greeted by derision by the Opposition, doubt by the financial sector, concern by his party colleagues and belittling scepticism from some media commentators.
His competence was questioned and his every pronouncement subjected to expressions of disbelief.
We note, however, that Mr Shaw seems to have silenced his critics, including his would-be nemesis, Dr Omar Davies. His achievements have been outstanding, given the desperate economic situation he inherited, compounded by the global financial crisis and handicapped by a weak technical team.
In these circumstances, we believe that Mr Shaw deserves to be congratulated, in the same way we lashed him for the botched tax package late last year.
His critics might want to send him an apology for writing off his prediction that he could get massive sums from multilateral financial institutions at very low rates of interest. The record shows that since assuming office, he has mobilised almost US$3 billion. The $1.25-billion from the International Monetary Fund is one of its most highly financed as a percentage of Gross Domestic Product. It will be accompanied by an additional $1 billion from the World Bank, the Inter-American Development Bank (IDB) and the Caribbean Development Bank (CDB).
The World Bank has come up with $200 million in policy support. The IDB has lent over $1 billion, in fact, more money to the Government in the last two years than in all of its previous years. The CDB entered into policy lending for the first time in its history to support Jamaica.
The interest rate on the World Bank loan is one per cent and on the IDB loans it is 1.23 per cent. This is even lower than the three per cent money that Mr Shaw claimed he could get.
He has changed the economic team with a new Bank of Jamaica governor and a not-so new financial secretary. He has brought in a new technical advisor with a PhD in Economics. He is getting along even better now and without the 'help' of Mr Don Wehby.
A unique and unprecedented debt swap has happened on his watch with almost 100 per cent voluntary participation and without any fallout in capital flight or exchange rate depreciation. The financial system has responded with patriotism and in a manner that demonstrates belief in the direction of economic policy.
Mr Shaw has broken the self-perpetuating cycle of outrageously high interest rates on domestic national debt. Interest rates have been brought down dramatically and the gluttonous commercial banks have been forced to start doing their core business of lending.
He has increased taxation, albeit with the embarrassing scaling down of the tax package, and signalled the intention of his Government to reduce public sector employment. He has had to stand up to enormous pressure for public sector wage increases, and has told the nation that the beloved Air Jamaica has to be sold or closed. These are among the most politically unpleasant announcements any politician has had to make.
He and Prime Minister Bruce Golding have courageously changed the course of Jamaica's economic policy by finally abandoning attempts to postpone fiscal adjustment and trying to finance fictitious growth by borrowing.
Through all of this stress and strain, he has maintained his sense of humour, his sartorial comportment and his calm earnestness.
Take a bow, Mr Shaw.
Respect due to Mr Shaw
Wednesday, March 03, 2010
Congratulations are due to Mr Audley Shaw, the embattled minister of finance, whose appointment, we'll remember, was greeted by derision by the Opposition, doubt by the financial sector, concern by his party colleagues and belittling scepticism from some media commentators.
His competence was questioned and his every pronouncement subjected to expressions of disbelief.
We note, however, that Mr Shaw seems to have silenced his critics, including his would-be nemesis, Dr Omar Davies. His achievements have been outstanding, given the desperate economic situation he inherited, compounded by the global financial crisis and handicapped by a weak technical team.
In these circumstances, we believe that Mr Shaw deserves to be congratulated, in the same way we lashed him for the botched tax package late last year.
His critics might want to send him an apology for writing off his prediction that he could get massive sums from multilateral financial institutions at very low rates of interest. The record shows that since assuming office, he has mobilised almost US$3 billion. The $1.25-billion from the International Monetary Fund is one of its most highly financed as a percentage of Gross Domestic Product. It will be accompanied by an additional $1 billion from the World Bank, the Inter-American Development Bank (IDB) and the Caribbean Development Bank (CDB).
The World Bank has come up with $200 million in policy support. The IDB has lent over $1 billion, in fact, more money to the Government in the last two years than in all of its previous years. The CDB entered into policy lending for the first time in its history to support Jamaica.
The interest rate on the World Bank loan is one per cent and on the IDB loans it is 1.23 per cent. This is even lower than the three per cent money that Mr Shaw claimed he could get.
He has changed the economic team with a new Bank of Jamaica governor and a not-so new financial secretary. He has brought in a new technical advisor with a PhD in Economics. He is getting along even better now and without the 'help' of Mr Don Wehby.
A unique and unprecedented debt swap has happened on his watch with almost 100 per cent voluntary participation and without any fallout in capital flight or exchange rate depreciation. The financial system has responded with patriotism and in a manner that demonstrates belief in the direction of economic policy.
Mr Shaw has broken the self-perpetuating cycle of outrageously high interest rates on domestic national debt. Interest rates have been brought down dramatically and the gluttonous commercial banks have been forced to start doing their core business of lending.
He has increased taxation, albeit with the embarrassing scaling down of the tax package, and signalled the intention of his Government to reduce public sector employment. He has had to stand up to enormous pressure for public sector wage increases, and has told the nation that the beloved Air Jamaica has to be sold or closed. These are among the most politically unpleasant announcements any politician has had to make.
He and Prime Minister Bruce Golding have courageously changed the course of Jamaica's economic policy by finally abandoning attempts to postpone fiscal adjustment and trying to finance fictitious growth by borrowing.
Through all of this stress and strain, he has maintained his sense of humour, his sartorial comportment and his calm earnestness.
Take a bow, Mr Shaw.
...mmmm? Races have other component parts!
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