Tweet
http://jamaica-gleaner.com/gleaner/2...fAl6at.twitter
By Edward Seaga
The Most Honourable PJ Patterson has decided to reveal his political preference publicly for the next general election. He has gone further. He has publicly advised the electorate to follow him, becoming the first ex-Prime Minister to openly interfere in the outcome of an election of a successor. I say so for the following reasons:
It was under his government, lead by him as Prime Minister, that Jamaica suffered its worst economic calamity when the meltdown of the financial system occurred in the 1990s. That calamity cost the country $144 billion which was 44 per cent of the value of the total production (GDP) of the country at that time, a devastating blow to the future of the people of Jamaica. Only two other countries in our post-World-War-2 history have ever done worse: Indonesia loss 50 per cent of its GDP and Argentina 50 per cent. These are facts.
When I took over the government in 1980, I went to see the World Bank. The president of the bank was Robert McNamara, esteemed former Harvard professor recruited to the cabinet of President John Kennedy. He came out of his office to welcome me and his opening words were "I commiserate with you Mr Prime Minister, you have just taken over the second worse economy in the world". Undaunted, we began the journey to climb out of the massive hole dug by the government of Mr Patterson's party in the 1970s, the bottom line of which was that the government, it was found, had spent nearly 20 per cent more than it earned (fiscal deficit), creating one of the worst deficits in the world at that time. The government I led climbed out of that hole in five years, and by 1986 the economy was in surplus.
This phenomenal achievement was accomplished in a relatively short period despite the fact that soon after the government was sworn in, the worst recession in 50 years (to the Great Depression, of 1929) hit Jamaica. Bauxite/Alumina earnings plunged to one half of where it was in 1980, costing the government over the decade 36 per cent of its foreign exchange earnings, or as much as the additional cost of oil in the entire decade of the 1970s. The loss in revenue was 44 per cent of the expected receipts. These left exceptional gaps which had to be closed and were closed by the end of the decade.
In addition, a third catastrophe hit the country in September 1988 when the worst hurricane in Jamaica's history wiped out most of the housing stock of the poor and ravaged commerce, manufacturing, agriculture and tourism. The country was virtually without electricity, water and telephones and suffered an attendant lock down of utilities while awaiting the restoration of services. Tourism, manufacturing and agriculture virtually halted and commerce ceased until business could resume operations to replenish supplies. Gilbert destroyed 10,300 houses and 229,300 were damaged. Viewing the disaster from an aeroplane, I remarked that the rural areas looked like Hiroshima after the atomic bomb.
Emergency programme
With an emergency programme put in place immediately, multilateral institutions like the World Bank and many friendly countries in the free world responded with US$500 million of financial assistance, manpower and skills, as well as food, clothing, medicine and other vital supplies. In three months, there was a restoration of power, water and telephone services, a clean-up of the litter and debris while the response in clearing the roads gave the country a clean fresh look which by Christmas astonished Jamaican visitors returning home.
This catastrophe was our equivalent of the demolition of the World Trade Centre in New York on September 11 ("9/11") except that Gilbert's struck on September 12.
When all the traumas of the 1980s were taken into account the government of that period had rescued the country three times in eight years from:
the legacy of the disaster of the 1970s;
the considerable damage of the worst recession in 50 years which hit the country in the 1980s; and
Jamaica's worst hurricane ever, Gilbert.
All these were mega disasters.
At the end of the decade, the turnaround of the economy was spectacular. Using 1987, 1988 and 1989, because of the distortions caused by Gilbert, the following were the key indicators at the beginning when responsibility for the economy was taken over, in 1980, and when it was handed over in 1989.
Selected indicators: GDP-inflation-unemployment differences 1980-90
Year GDP Inflation Unemployment
1980 -5.7% 28.6% 27.3%
1987 5.2% 8.4% 21.0%
1988 0.6% 8.5% 18.9% (Gilbert)
1989 4.6% 17.2% 18.0%
It took two terms of government and skilled management to accomplish this turnaround, restoring annual growth by 6.3 per cent and considerably reducing inflation and unemployment, each by 20.1% and 8.4% respectively. It will take two terms now to overcome the equally daunting challenge of today and to restore normality, if there is no occurrence of another recession.
Edward Seaga is a former Prime Minister