Dawn Ritch, Contributor
FROM the moment Jacques Bussieres set foot in this island in the early 1990s, and became Governor of the Bank of Jamaica (BoJ), I said this was one brassiere that would not lift a thing.
He was to provide the fiscal uplift for the policies of the then newly-appointed Minister of Finance, Dr. Omar Davies. Bussieres came to Jamaica after overseeing the Zambian economy. The local currency there literally breathed a sigh of relief upon his departure, and revalued.
Of course, no one paid any attention, not even when Dr. Davies and his then BoJ Governor opened the printing presses for the Jamaican dollar full throttle. Not much was heard either when inflation hit 40-50 per cent, and the interest rates zoomed to 40-50 per cent as well.
A few manufacturers began to whisper that the local banks were making a killing, and ruining Jamaican manufacturing in the process. But none of them said that the high cash reserve requirements at the BoJ for these banks was killing that sector as well. It was cowardice at every turn, and each man disgustingly for himself.
The leaders of the Jamaican private sector therefore share a collective guilt because they said nothing. This cowardice led to unfettered fiscal pressure upon the entire country. The Government's policies proceeded to put pressure upon mortgages, borrowers, our manufacturing sector and the banking sector. All these have therefore disappeared from the face of the island in all but name.
Midway Dr. Davies changed his policy and stopped printing money. Thus there was no money in the system, so no credit. Interest rates were curbed somewhat, but Dr. Davies' fiscal policy target became that of protecting the value of the Jamaican dollar.
Shadow
Our currency was by that time an already pitiful shadow of its former self, when Dr. Davies decided it was looking like an endangered species. But it had been raped by his policies of inflation and high interest rates, and left for dead on the side of the road.
Next, our fearless warrior Dr. Omar Davies decided that his policy goal as Finance Minister was now to tame inflation. What a daring feat that was to destroy a creature of one's own making.
Dr. Davies has had so many revisions of policy that it doesn't even matter that the International Monetary Fund (IMF) appears to agree with his several measures. He has had so many, and changed them every fortnight, that the IMF must agree with something or other sometime or other. Furthermore the opinion of the IMF is neither here nor there, since Jamaica does not have an IMF programme, but a staff-monitored programme (SMP). This means that they are not agreeing anything, only consultants to the process.
They were brought in by Dr. Davies following the collapse of the local financial sector and the domestic economy. So the IMF bears no responsibility for Dr. Davies' intervention in the financial sector, nor for Finsac. The Finsac debt the Finance Minister coolly informed us recently, was $192,000 per person living in Jamaica. Since most of us can barely buy a pack of Cheese Crunchies, this is a public recipe for disaster of unmitigated proportions.
Thus Dr. Davies announced his newest policy target of unlimited overseas borrowing in the international financial market. And he's confident of success because he says he has the blessing of the IMF.
What IMF blessing is this may I ask? Permission to borrow hard currency at 12 per cent, when it can be had directly from the IMF for slightly more than 4 per cent? Approval to borrow at three times the price an as yet unspecified quantity of money, purely because it can be had? This is not fiscal prudence, but drunken fiscal decadence of unseemly illegality and recklessness.
Only now does Dr. Davies go to the House of Representatives for the authority to exceed the Government's loan limits. This is after already breaking them by double, and boasting that he can quadruple this with little effort, and in no time at all.
He does so only with the most catastrophic results. He is supposed to manage the finances of the country within the confines of the law, and has not done so. I doubt that he will be fired, however, because his boss the Prime Minister is not shackled by the law, and neither is he.
Public debt
The public debt is currently in the order of 150 per cent of GDP. Dr. Davies has sold the assets of the country, from NCB and JPSCo to the cement company and telecom licences utterly to no avail.
Our public debt is not being paid, and instead grows by leaps and bounds. Indeed the Government's sordid plan to raise unlimited funds overseas is samfie fiscal policy, because it is irresponsible and destructive economic policy.
If our Government were serious about the public debt, they would use the assets to pay down the debt and borrow money at 4 per cent, not 12 per cent. This calculated mismanagement of public policy is hiding behind the fig-leaf of an IMF staff-monitored programme. The IMF states, "This monitoring does not, however, represent endorsement of the programme." The other fig-leaf is Bears and Stearns which is a Wall Street commission agent, and should not be relied upon. Types like these led to the collapse of Enron.
Nevertheless the IMF with its SMP, gives the appearance of endorsing Jamaica's fiscal policies. With its complicity therefore, and no sense of crisis nor fiscal problem, Dr. Davies has locked up the future potential of this country. Where does he draw the line?
FOOTNOTE: In a recent column "Unsolved Mysteries", I mentioned a shipment of illegal conch sent to the USA by a company owned by the President of JAMPRO and her husband.
In a subsequent letter to the Editor, JAMPRO President Mrs. Patricia Francis admitted that the organisation is "... authorised to administer the certification of exporters".
As the Government's economic development agency, JAMPRO is expected to nurture and protect the reputation of the country's export.
I fail to see therefore, how JAMPRO can carry out this responsibility if it has no interest in what is being exported.
