THE COUNTRY'S debt burden has dominated discussion in the Budget Debate so far. In his update on this vexed issue, the Finance Minister disclosed that, at the end of March, the total stock of public debt was $495 billion which is 133 per cent of GDP. Of that total debt figure, domestic debt totalled $300 billion and accounted for 81 per cent of GDP. For the current fiscal year Government plans to borrow additional amounts of $58.3 billion in the domestic market and $26.1 billion in overseas markets, making for total loans of $84 billion.
In his discussion of the debt crisis on Tuesday, Opposition Spokesman on Finance Audley Shaw proposed alternative strategies for coping with the crisis than those being pursued by Government. According to Mr Shaw, his party would source cheaper long-term funds abroad than the relatively high-cost 11 per cent money Government currently pays. Additionally Mr. Shaw said that the Opposition would float "resurgent bonds" to Jamaicans residing overseas at rates 5-7 per cent. This initiative, he argued, would be combined with an aggressive debt reduction plan aimed at Jamaica's international creditors.
Mr. Shaw's proposals warrant discussion. In the first place, the expansion in overseas remittances makes a major contribution to the balance of payments, providing investors with an attractive instrument priced at 5-7 per cent and should sit well with overseas Jamaicans.
Further, such a move should provide additional spin-offs such as inducing more involvement in the economy by overseas Jamaicans, especially in tourism-related investments.
Thirdly, this strategy of enticing overseas Jamaicans to become more involved in the local economy could be easily incorporated in Mr. Shaw's recommendation of government selling some of the shares in entities it still owns to stimulate the local stock market.
This is not to suggest that Mr. Shaw does not have more homework to do in refining his proposals especially that of a debt reduction plan with international creditors. We are convinced however, that where the debt problem is concerned, it cannot be business as usual. Further, we believe that more creative ways can be devised to confront the problem than have been attempted so far. Interestingly, former Professor of Economics at UWI, Dr. Kari Levitt, proposed designing instruments to appeal to overseas Jamaicans, as tried by the Indian government, as part of the creative response the debt crisis demands.
Relying on deferred financing can provide temporary relief but the debt crisis demands immediate solutions that are not beyond local initiative. We support Mr. Shaw on this point.
