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Subject: FACTS about the Jamaican economy
1) During the 18 years of the PNP Administration, there were 15 years of positive growth – 1989 through 1995 and 1999 through 2007. In contrast, the economy declined in each of the first 3 years of this JLP Administration, 2008, 2009 & 2010, and remains sluggish this year.
2) The economy at the end of 2010 was 5% smaller than it was in 2007.
3) The total national debt has increased from $950 billion in September 2007 to $1,607 billion in September 2011, an increase of 66% in 4 years!!!
4) The Debt to GDP ratio has moved from 107% in September 2007 to 130% in March 2011.
5) The PNP reduced poverty from just under 30% in 1989 to 9.6% in 2007. In the first 3 years of this JLP Administration, poverty has doubled. So ashamed is this Administration about this statistic that they have delayed the publication of the SLC data. The publication for 2010 is still not available.
6) The failure of this Administration to
(i) acknowledge the international economiccrisis, and
(ii) to take counter measures,
are major contributory factors to the present state of affairs. The 2008/09 Budget was unrealistic, committing the Administration to expenditures which could not be financed. The result was unplanned increased borrowing. As the GOJ became more desperate, the market demanded higher rates of interest. The combination of increased borrowing, at higher interest rates is the major factor leading to the 66% increase in the national debt.
7) The mismanagement of the economy and the failure to recognize the crisis led to delays in approaching the IMF. These delays undermined the GOJ's bargaining position, leading to an Agreement which was onerous in its demands and thus bound to collapse. In fact, the Administration was in danger of failing the very first Test in March, 2011. Consequently, desperate measures had to be taken, including raiding the NHF, the TEF and other funds, in order to meet the deficit target for March 31, 2010.
8) Subsequently, the Tests at the end of December 2010, March 2011, June 2011 and September 2011 have been failed. The Agreement will have to be renegotiated but our bargaining position has been further weakened.
9) The failure of the Tests has meant that the Administration has been unable to access supporting credit from other institutions (IDB & EU) - in excess of US$300 million. The inability to draw down these funds has two immediate negative consequences:
(i) the Administration has been forced to borrow $34 billion on the local market more than originally programmed. (Luckily, this has had no impact on interest rates because there is low demand for credit from the private sector);
(ii) the NIR has been affected adversely as the BOJ's FE Budget had anticipated purchasing this US$300M from the MOF.
10) The crisis in the economy and the collapse of the Standby Agreement are perhaps the major factors which will dictate an early poll. For that reason, there is need to be relentless in focusing on the economic issues.
1) During the 18 years of the PNP Administration, there were 15 years of positive growth – 1989 through 1995 and 1999 through 2007. In contrast, the economy declined in each of the first 3 years of this JLP Administration, 2008, 2009 & 2010, and remains sluggish this year.
2) The economy at the end of 2010 was 5% smaller than it was in 2007.
3) The total national debt has increased from $950 billion in September 2007 to $1,607 billion in September 2011, an increase of 66% in 4 years!!!
4) The Debt to GDP ratio has moved from 107% in September 2007 to 130% in March 2011.
5) The PNP reduced poverty from just under 30% in 1989 to 9.6% in 2007. In the first 3 years of this JLP Administration, poverty has doubled. So ashamed is this Administration about this statistic that they have delayed the publication of the SLC data. The publication for 2010 is still not available.
6) The failure of this Administration to
(i) acknowledge the international economiccrisis, and
(ii) to take counter measures,
are major contributory factors to the present state of affairs. The 2008/09 Budget was unrealistic, committing the Administration to expenditures which could not be financed. The result was unplanned increased borrowing. As the GOJ became more desperate, the market demanded higher rates of interest. The combination of increased borrowing, at higher interest rates is the major factor leading to the 66% increase in the national debt.
7) The mismanagement of the economy and the failure to recognize the crisis led to delays in approaching the IMF. These delays undermined the GOJ's bargaining position, leading to an Agreement which was onerous in its demands and thus bound to collapse. In fact, the Administration was in danger of failing the very first Test in March, 2011. Consequently, desperate measures had to be taken, including raiding the NHF, the TEF and other funds, in order to meet the deficit target for March 31, 2010.
8) Subsequently, the Tests at the end of December 2010, March 2011, June 2011 and September 2011 have been failed. The Agreement will have to be renegotiated but our bargaining position has been further weakened.
9) The failure of the Tests has meant that the Administration has been unable to access supporting credit from other institutions (IDB & EU) - in excess of US$300 million. The inability to draw down these funds has two immediate negative consequences:
(i) the Administration has been forced to borrow $34 billion on the local market more than originally programmed. (Luckily, this has had no impact on interest rates because there is low demand for credit from the private sector);
(ii) the NIR has been affected adversely as the BOJ's FE Budget had anticipated purchasing this US$300M from the MOF.
10) The crisis in the economy and the collapse of the Standby Agreement are perhaps the major factors which will dictate an early poll. For that reason, there is need to be relentless in focusing on the economic issues.
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