By McPherse Thompson, Staff ReporterCUTTING interests rates in a sustainable way is once again being cited as the key to economic growth in 2001, according to private sector players.
At the same time, financial analyst John Jackson, in also calling for a reduction in interest rates, has predicted that while there will not be a "great level of growth in the economy, this year is going to be better."
Asked what was their outlook on the economy for 2001, both the Private Sector Organisation of Jamaica (PSOJ) and the Jamaica Chamber of Commerce (JCC), two of the island's largest business lobby groups, suggested that for there to be growth in the economy, an effort must be made to reduce interest rates.
PSOJ executive director, Charles Ross, said the extent to which the economy will be different during this year will be dependent on a shift in Government's macro-economic policy, particularly as it relates to interest rates.
"We would like to see it going down, but at present it's going up," said Mr. Ross. However, he said the PSOJ would have to wait to see whether there will be a reduction in the rates and whether that can be sustained for any prolonged period.
"It's very difficult for us to be optimistic for 2001 without that happening," he said. "We see economic growth as the major objective of economic policy and interest rates play a major role in determining whether we have growth or contraction in the economy."
"Unless we see interest rates heading down on a rapid and sustained basis it's very difficult to be optimistic for 2001," Mr. Ross said.
JCC president Anthony Chang, while noting that the Chamber would not attempt to predict the economic results for 2001, said that among the issues on which they would focus during the year would be interest rate reduction, double taxation on dividends for non-listed companies, and what could be done to remove the distortion the informal economy was causing on compliant firms.
Mr. Chang noted that last year, Finance Minister Dr. Omar Davies removed the double taxation on dividends for shareholders of listed companies. "The Chamber applauded this move, but feels it should also include non-listed companies as well," said the JCC president.
He also listed currency reform as forming part of the focus on the JCC during this year. "The JCC does not have a position on the issue," he said, but said the Chamber was encouraging the opening of a debate on whether Jamaica required a currency board, dollarisation or some hybrid of the two.
In his outlook on the economy for 2001, Mr. Jackson, a chartered accountant, noted that for some people, such as those in the productive sector, interest rates were too high, but argued that the recent hike was a temporary phenomenon.
Mr. Jackson was speaking at a meeting of the Lions Club of Kingston at Le Meridien Jamaica Pegasus Hotel, New Kingston on Wednesday. Noting that there were a mix of negatives and positives within the Jamaican society, Mr. Jackson said he was expecting to see the economy doing better during this year in part because of the cost of oil which was being reverted "to the US$20-odd range."
He said that with a cut in oil prices on the international market and therefore a reduction in Jamaica's oil bill, there should be significant room for reducing interest rates.
"I don't think the year ahead will by any means be rosy, but I don't think it will be disastrous," Mr. Jackson said.
Chairman of the Sugar Association of the Caribbean and past-president of the Jamaica Exporters Association, Karl James, who attended the Lions Club meeting, told the Financial Gleaner later that he supported Mr. Jackson's focus on interest rates reduction, as well as "watching the money supply and the exchange rate."
According to Mr. James, the economy would not be able to expand "with this type of interest rate regime; they need to lower interest rates to expand the economy."
