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DR PETER Phillips is right. Jamaica faces an economic crisis about which the people should be told the truth. But merely alerting us to the Government's failings is not good enough for the shadow finance minister. That is like expecting to win by default.
What Dr Phillips and the People's National Party (PNP) must do is level with the people about the limited options available, even if it is the PNP that wins the general election. In that event, Dr Phillips, as finance minister, will have a hard job.
Should anyone doubt the narrow space within which Jamaica has to manoeuvre, they need only look at Greece and Italy. They, too, faced debt crises. Financial markets lost confidence in the ability of their leaders to implement difficult reforms. Having dithered for long, Greece and Italy flirted with bankruptcy.
Jamaica's debt, at August, was $1.6 trillion, or 130 per cent of GDP - around 10 percentage points higher than Italy's, but 20 points lower than Greece's. There are, however, off-book obligations not properly captured in Jamaica's official debt numbers.
In 2010-11 Jamaica's debt servicing of $230 billion, including amortisation, accounted for nearly 60 per cent of direct government spending, or over 70 per cent of all income. Indeed, the bit of over $80 billion left from taxes and grants could merely cover a third of the Government's wage bill. As administrations have done for decades, the Government borrowed to meet its basic expenses.
Dithering at the people's expense
This, as Greece and Italy discovered, was unsustainable. Jamaica dithers at the people's expense.
The situation demands that the Government cut expenditure as well as reform its tax system to earn more. This may mean public-sector job losses and government employees will have to contribute to their pensions. People who previously escaped will have to pay taxes. Or, we might choose to default.
We know the Government has fudged. What will Dr Phillips do?
http://jamaica-gleaner.com/gleaner/2...ead/lead2.html
What Dr Phillips and the People's National Party (PNP) must do is level with the people about the limited options available, even if it is the PNP that wins the general election. In that event, Dr Phillips, as finance minister, will have a hard job.
Should anyone doubt the narrow space within which Jamaica has to manoeuvre, they need only look at Greece and Italy. They, too, faced debt crises. Financial markets lost confidence in the ability of their leaders to implement difficult reforms. Having dithered for long, Greece and Italy flirted with bankruptcy.
Jamaica's debt, at August, was $1.6 trillion, or 130 per cent of GDP - around 10 percentage points higher than Italy's, but 20 points lower than Greece's. There are, however, off-book obligations not properly captured in Jamaica's official debt numbers.
In 2010-11 Jamaica's debt servicing of $230 billion, including amortisation, accounted for nearly 60 per cent of direct government spending, or over 70 per cent of all income. Indeed, the bit of over $80 billion left from taxes and grants could merely cover a third of the Government's wage bill. As administrations have done for decades, the Government borrowed to meet its basic expenses.
Dithering at the people's expense
This, as Greece and Italy discovered, was unsustainable. Jamaica dithers at the people's expense.
The situation demands that the Government cut expenditure as well as reform its tax system to earn more. This may mean public-sector job losses and government employees will have to contribute to their pensions. People who previously escaped will have to pay taxes. Or, we might choose to default.
We know the Government has fudged. What will Dr Phillips do?
http://jamaica-gleaner.com/gleaner/2...ead/lead2.html
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