... Media, academia played role in pushing for stabilisation programme
THE DEBT crisis confronting the country became clearer by the early 2000s, resulting from years of borrowing on international capital markets to finance unsustainable – in the context of the unstable Jamaican economy – levels of recurrent expenditure, the costs associated with extricating the country from the late 1990s financial crisis, the costs of rehabilitating the country from weather-related shocks, and the cost associated with the financing of contingent liabilities the Government of Jamaica accepted with the implicit or explicit guarantee of losses in previously privatised and nationally owned enterprises.
As the debt crisis simmered, with Jamaica moving into the position of one of the world’s most indebted economies, the Jamaican media became ardent advocates of economic reform and debt reduction, with The Gleaner, in particular, devoting numerous editorials to the subject in the 2011-2013 period.
IMPROVED DEBT
The academic and research community contributed significantly. The Caribbean Policy Research Institute played an important role in the developing consensus, in the context of a seminal study on the debt problems across the Caribbean region, and in providing key insights into how careful management could create an inflexion point that would transform a vicious cycle of increasing indebtedness to a virtuous cycle of improved debt dynamics.
The almost two decades of effort to engage in social dialogue, technical advocacy and consensus building around the need for a national effort to enhance Jamaica’s national competitiveness by first stabilising the economy provided a platform upon which successive Jamaican administrations, under the leadership of Peter Phillips, Audley Shaw and Nigel Clarke, with the strong support of prime ministers Portia Simpson Miller and Andrew Holness, have taken decisive steps in implementing a programme of reform. These efforts also contributed to the ability of the trade-union movement and the financial sector to see the virtue in agreeing to the prior action items of wage constraint and debt exchange that the International Monetary Fund required of Jamaica before it would enter into the 2013 Extended Fund Facility programme.
It is the cumulation of these efforts that helps explain why Jamaica has had more success in economic stabilisation in the current period, than in any prior period during which it has operated a liberal market economy. But Jamaica has no victory it can yet celebrate. The country’s average income per person is about US$5,000. The average income per person in the Cayman Islands, over which pre-independent Jamaica had administrative control and Jamaica in 1960 had an income per-person advantage, is about US$57,000. The Cayman Islands is now considered by the United Nations as one of the ten wealthiest territories/countries in the world.
Jamaica’s economic-reform programme is still nascent and needs the continuing support of constituents across the country. With an income per person of only US$5,000, Jamaica continues to be unable to meet the reasonable aspirations for compensation, service provision and infrastructure development of its citizens. Jamaica has no mechanism for funding these aspirations other than through a growing economy. It has tried to meet the aspirations of its citizens through inflation and through borrowing. Neither of these approaches lead to sustainable development; indeed, their consequences are dire. Macroeconomic and macro-social stability will create the foundation upon which Jamaica can grow its economy. All hands still need to stay on deck to achieve this stability and growth.