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EDITORIAL - Seizing the economic reins
published: Tuesday | September 11, 2007
Today is the swearing-in of our new Prime Minister. We wish him and his colleagues all the very best. The country's expectations of him are high and we have every confidence that he is of a mind to deliver. Jamaica faces many urgent problems, not least of all in the area of economic management. The new Govern-ment must hit the ground running. We therefore look forward to the swift appointment of a new Minister of Finance as soon as the new Prime Minister is sworn in. Constitutional requirements may prolong the full transition to a new Government; market forces will brook no such delay.
The Jamaican economy, with its budget deficits and high debt burden, is extremely sensitive to uncertainty of any kind. It requires constant and detailed monitoring to ensure that no unpleasant fiscal or monetary surprises creep up on us unannounced. Already there has been significant movement in the Jamaican dollar since the general election - a clear signal that the market is operating on its own timetable and is no respecter of politics or constitutional niceties.
Given that the Government-elect has been out of office for 18 years, it is inevitable that they would not be familiar with the details of our fiscal and monetary situation. Mr. Golding has affirmed, in general terms, that his government will meet all its financial obligations. This is to be welcomed and we look forward to even more specific statements along the same lines very shortly.
In the heat of an election campaign, it is inevitable that both sides take positions which are directed primarily at winning popular support. The market is sophisticated enough to discount these as propaganda but looks for clear-cut reassurances once the election is over. In this regard, the Government-elect has to very carefully consider the effect of its statements as well as its silences.
Further, if persons having the Government-elect's ear take public positions which seem to call into question the importance of a significant primary budget surplus, then it should surprise no one if this causes jitters in the markets. Whatever ideas may have been floated in its manifesto, the new Government should be in no doubt about this immediate reality: The primary surplus is the tangible expression of the commitment of the Government to honour its debt obligations. Any attempt to 'change course' in that area must therefore be resisted at all costs.
A similar problem arises with the notion of reducing the budget deficit by legislative means. While we have no quarrel with such an idea in principle, in practice it will take years for such an approach to take effect. In the meantime, the task of curtailing the budget deficits of this quarter and meeting the fiscal targets for the current financial year looms as an immediate challenge. Whatever attachment the new Government may have to its theoretical positions, it must not lose sight of the urgent practical realities which we face. It must seize the reins of the economy now and make crystal clear its unshakeable commitment to the maintenance of strict macroeconomic stability.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
published: Tuesday | September 11, 2007
Today is the swearing-in of our new Prime Minister. We wish him and his colleagues all the very best. The country's expectations of him are high and we have every confidence that he is of a mind to deliver. Jamaica faces many urgent problems, not least of all in the area of economic management. The new Govern-ment must hit the ground running. We therefore look forward to the swift appointment of a new Minister of Finance as soon as the new Prime Minister is sworn in. Constitutional requirements may prolong the full transition to a new Government; market forces will brook no such delay.
The Jamaican economy, with its budget deficits and high debt burden, is extremely sensitive to uncertainty of any kind. It requires constant and detailed monitoring to ensure that no unpleasant fiscal or monetary surprises creep up on us unannounced. Already there has been significant movement in the Jamaican dollar since the general election - a clear signal that the market is operating on its own timetable and is no respecter of politics or constitutional niceties.
Given that the Government-elect has been out of office for 18 years, it is inevitable that they would not be familiar with the details of our fiscal and monetary situation. Mr. Golding has affirmed, in general terms, that his government will meet all its financial obligations. This is to be welcomed and we look forward to even more specific statements along the same lines very shortly.
In the heat of an election campaign, it is inevitable that both sides take positions which are directed primarily at winning popular support. The market is sophisticated enough to discount these as propaganda but looks for clear-cut reassurances once the election is over. In this regard, the Government-elect has to very carefully consider the effect of its statements as well as its silences.
Further, if persons having the Government-elect's ear take public positions which seem to call into question the importance of a significant primary budget surplus, then it should surprise no one if this causes jitters in the markets. Whatever ideas may have been floated in its manifesto, the new Government should be in no doubt about this immediate reality: The primary surplus is the tangible expression of the commitment of the Government to honour its debt obligations. Any attempt to 'change course' in that area must therefore be resisted at all costs.
A similar problem arises with the notion of reducing the budget deficit by legislative means. While we have no quarrel with such an idea in principle, in practice it will take years for such an approach to take effect. In the meantime, the task of curtailing the budget deficits of this quarter and meeting the fiscal targets for the current financial year looms as an immediate challenge. Whatever attachment the new Government may have to its theoretical positions, it must not lose sight of the urgent practical realities which we face. It must seize the reins of the economy now and make crystal clear its unshakeable commitment to the maintenance of strict macroeconomic stability.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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