Excessive borrowing is never good
THE EDITOR, Sir:
I AGREE with Prime Minister (PM) Andrew Holness that Jamaica’s excessive borrowing must stop. The PM was speaking to a National Competitive Council meeting in the Office of the PM, reflecting on Jamaica’s ranking in the Global Competitive Report (GCR) as well as the Doing Business Report (DBR), which saw the country’s ranking on the decline. The meeting discussed Jamaica’s decline in ranking, where GCR fell from 78 to 79 (out of 140 countries) and DBR fell five places to five (out of 190 countries) based on publication of these reports. Competitiveness takes into account factors such as labour market, business dynamism, market size, macroeconomic stability and debt, as well as homicide and organised crime.
Excessive borrowing is never good, whether by persons, businesses or government. It is in this context I’ve asked before; why did government rush into a J$9-billion loan from the InterAmerican Development Bank to fund NIDS and digitisation of government services? Many have already shared concerns about NIDS, and while digitisation is commendable to improve services, I believe this aspect could be done in phases based on priority and urgency and costbenefit. First-world countries like Canada that can afford it, are just now beginning the process of digitisation of their services, and even so it will be ongoing, based on policy and public consultation. Nothing will be implemented forcefully or rushed.
We are Third World, and will remain on that level if we constantly borrow and use most of our earnings to repay loans. We cannot pretend to be First World when we are not. Likewise, we cannot continue heavy borrowing to keep up appearances. You don’t have to be an economist to know that more debt will eventually lead to more taxes later on, as most of our revenues will be used to service debt and extra funds can only arise from increased taxes (or more loans). It’s a vicious cycle we must break. I don’t understand how the PM can oppose excessive borrowing, then on the other hand continue to sink the country into more debt.