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EDITORIAL - Don't Squander This Opportunity, PM
Published: Sunday | October 7, 2012 0 Comments
Prime Minister Portia Simpson Miller is being afforded another opportunity to rescue her drifting premiership and establish a lasting political legacy. If she accepts it, she would be the leader under whose watch Jamaica sets itself on a course of sustained stability and robust growth.
But to embrace this opportunity, being opened by Jamaica's negotiations with the International Monetary Fund (IMF) for an extended fund facility, Mrs Simpson Miller will have to take the risks, for which she has not in the past demonstrated an appetite.
In that sense, Mrs Simpson Miller is, essentially, conservative, preferring to hew closely to the political populism that has served her well, rather than pursue broader gains via economic action. Fortuitously for the PM, the ideology on which she used to prosper is no longer, at least not in the near term, sustainable.
The statistics bear out the dilemma.
Over the past four decades or so, Jamaica, particularly in the 1990s when there was a global economic boom, was largely in a standing march, growing by less than one per cent a year. Our Government borrowed to meet basic expenses and pay salaries, siphoning investable funds from the private sector and, more critically, saddling Jamaica with a debt of 140 per cent of gross domestic product - one of the world's highest. Further, we have spawned a bureaucracy that is inefficient and, in perception and fact, corrupt.
These failures are further manifested in Jamaica's poor education outcomes, its high level of social dysfunction, as well as - at more than 40 per 100,000 - one of the world's highest homicide rates.
Tough job
Fixing Jamaica, clearly, will be tough. The job, however, will be made easier if there is strong growth, job creation, surpluses and, thereby, the taxes required to be utilised in, as Mrs Simpson Miller puts it, balancing the Budget while balancing people's lives.
But repairing the economy for growth forces upon the Government difficult choices which, unfortunately, Jamaican administrations have in the past avoided. Politicians are fearful of telling voters that they have to bear some hard times while the job is being done. Or, when they do, it is not a bold, frank undertaking in which citizens are offered a stake.
Mrs Simpson Miller's chance for personal redemption and to effect national gain rests on the convergence of two factors: Jamaica is at the brink, and the fact that we need the IMF's imprimatur to help us avoid catastrophe. The latter factor is significant.
It is beyond debate that our debt is unsustainable. The IMF, in exchange for its help, insists that it be lowered as a proportion of the economy. That can be achieved by borrowing less or achieving growth, or a combination of these.
We begin to attack the problem by lowering the absolute or relative number of public-sector employees; requiring government workers to contribute more to their pensions; and overhauling the tax system for efficiency. These may translate to some people losing jobs, the State withdrawing some services, and vested interests losing privileges.
This kind of reform, however, is as much a political undertaking as an economic matter. It requires engagement of, and buy-in from, the people who will be pained. No one in the Government is better endowed for this task than Mrs Simpson Miller.
Does she have the will for it?
Published: Sunday | October 7, 2012 0 Comments
Prime Minister Portia Simpson Miller is being afforded another opportunity to rescue her drifting premiership and establish a lasting political legacy. If she accepts it, she would be the leader under whose watch Jamaica sets itself on a course of sustained stability and robust growth.
But to embrace this opportunity, being opened by Jamaica's negotiations with the International Monetary Fund (IMF) for an extended fund facility, Mrs Simpson Miller will have to take the risks, for which she has not in the past demonstrated an appetite.
In that sense, Mrs Simpson Miller is, essentially, conservative, preferring to hew closely to the political populism that has served her well, rather than pursue broader gains via economic action. Fortuitously for the PM, the ideology on which she used to prosper is no longer, at least not in the near term, sustainable.
The statistics bear out the dilemma.
Over the past four decades or so, Jamaica, particularly in the 1990s when there was a global economic boom, was largely in a standing march, growing by less than one per cent a year. Our Government borrowed to meet basic expenses and pay salaries, siphoning investable funds from the private sector and, more critically, saddling Jamaica with a debt of 140 per cent of gross domestic product - one of the world's highest. Further, we have spawned a bureaucracy that is inefficient and, in perception and fact, corrupt.
These failures are further manifested in Jamaica's poor education outcomes, its high level of social dysfunction, as well as - at more than 40 per 100,000 - one of the world's highest homicide rates.
Tough job
Fixing Jamaica, clearly, will be tough. The job, however, will be made easier if there is strong growth, job creation, surpluses and, thereby, the taxes required to be utilised in, as Mrs Simpson Miller puts it, balancing the Budget while balancing people's lives.
But repairing the economy for growth forces upon the Government difficult choices which, unfortunately, Jamaican administrations have in the past avoided. Politicians are fearful of telling voters that they have to bear some hard times while the job is being done. Or, when they do, it is not a bold, frank undertaking in which citizens are offered a stake.
Mrs Simpson Miller's chance for personal redemption and to effect national gain rests on the convergence of two factors: Jamaica is at the brink, and the fact that we need the IMF's imprimatur to help us avoid catastrophe. The latter factor is significant.
It is beyond debate that our debt is unsustainable. The IMF, in exchange for its help, insists that it be lowered as a proportion of the economy. That can be achieved by borrowing less or achieving growth, or a combination of these.
We begin to attack the problem by lowering the absolute or relative number of public-sector employees; requiring government workers to contribute more to their pensions; and overhauling the tax system for efficiency. These may translate to some people losing jobs, the State withdrawing some services, and vested interests losing privileges.
This kind of reform, however, is as much a political undertaking as an economic matter. It requires engagement of, and buy-in from, the people who will be pained. No one in the Government is better endowed for this task than Mrs Simpson Miller.
Does she have the will for it?
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