In the aftermath of Matthew
EVEN BEFORE the waters have receded and any debris left by Hurricane Matthew is cleared, the administration will be concentrating on the impact of the storm on the Jamaican economy. Hopefully, it is negligible.
For, as Prime Minister Andrew Holness said as the storm barrelled towards the island last week: “This weather event could derail our economic programme.”
The fact is, Jamaica’s economy, despite the gains after four years of tough, painstaking reforms, remains vulnerable. Sure, the debt-to-GDP ratio has fallen by around 20 percentage points to 125 per cent; the current account deficit, which used to be in double digits, is now around two per cent of GDP; and the Government is about to balance its Budget.
The improvements in the macroeconomy have begun to translate into economic growth: After meandering for the better part of a generation, the economy expanded by around one per cent, in real terms, during the 2015-16 fiscal year, and was projected to grow by a further 1.7 per cent this fiscal year. These are by no means huge numbers, but they represent critical groundwork on which the country can continue to build, including offering an environment within which Michael Lee-Chin’s Economic Growth Committee (EGC) could possibly deliver on its five per cent growth in four years’ time.
The problem, though, is that this foundation is vulnerable. Inappropriate policies and generally bad management, over the past four decades, have left Jamaica with relatively little insulation when things go awry. There is little to nothing built up in the kitty to deal with emergencies. And despite its improvement in recent years, Jamaica’s debt profile is not one that endears it to the more emollient spectrum of global financial markets. Bilateral and multilateral partners may help, but often the time lag between appeals for assistance and the disbursement of aid means its palliative effect is less than intended.
That is why, whatever the effect of Matthew, great or small, we hope that Mr Holness is able to deliver on his promise that government agencies will act with efficiency and urgency to ensure a speedy recovery and lessen the negative consequences of the storm on the broad economy.
ECONOMIC CONSEQUENCES
There are a number of actions to which the Government should pay attention, going forward, which can lower the human cost, and the economic consequences of natural disasters. Notably, in the last quarter-century, at least since Hurricane Gilbert in 1988, the damage left by storms is not primarily from their winds, but the floods.
This reflects, partly, the inadequacy of upkeep and poor state of repair of public infrastructure, like drains and gullies, and the inability of the Government to spend on their expansion and upgrade. But this is the smaller part of the problem. The greater portion is poor management – the inability of our governments to do the small things and to get them right consistently. So, drains and gullies are not cleaned; forested islands develop in them, or they are clogged with PET containers. These are inexpensive fixes that merely require concerted attention and the enforcement of laws that already exist. The same is the case with the management of watersheds, whose abuse leads to erosion and contribute to flooding.
The Government must also promulgate and enforce development orders, on which we have dithered for decades, as well as passed a law for the mandatory evacuation of residents from vulnerable areas during potential natural disasters and be ready to apply the penalties when the rules are flouted.