Shaw... not impressed. BY FAR the most glaring deficiency to have surfaced during these first 100 days of the People's National Party (PNP) administration is the issue of an economy in disarray, with the country's stock of debt climbing to new and astronomical heights while there continues to be little or no growth.
In its election manifesto 2002, the PNP sets out its usual lofty targets for Gross Domestic Product (GDP) growth, employment creation, low inflation, the Net International Reserves (NIR), exchange rate stability, fiscal deficit, debt to GDP ratio and interest rates.
The PNP is never short on setting out ambitious targets. Its problem is in achieving them.
In addition to the targets set out in the PNP's Manifesto, the Finance Minister, Dr. Omar Davies, during the Budget Debate last year, promised us "NO NEW TAXES".
THE INDICATIVE DIRECTION
In these first 100 days, the indicative information is that the Government is way off the mark in its efforts to achieve many of the targets in the short or medium term. At the time of the presentation of the Supplementary Estimates in Parliament, the Finance Minister admitted the following:
- The debt as a percentage of GDP, instead of moving from 133 per cent
of GDP to 126 per cent of GDP as targeted, will instead move to $570 billion
or a whopping 141 per cent of GDP by March of this year. The debt is moving
in the wrong direction.
- The fiscal deficit was programmed to be 4.4 per cent of GDP. The revised
figure will be 8.4 per cent of GDP by March of this year.
- Revenues are off target by $11 billion.
- External loan receipts are off by $11 billion.
- Expenditure has been increased by $13 billion due to a $10 billion
back pay package and higher than programmed public debt charges.
- Interest rates (Government Treasury Bill Rates), instead of going
below 13 per cent have increased to 18 per cent, thereby putting average lending
rates closer to 30 per cent once more. This is the largest single issue exacerbating
the fiscal deficit targets and seriously militates against investment and
export competitiveness. The recent decision of the Bank of Jamaica to increase
the Cash Reserve Ratio will only make matters worse.
- A tax package of $205 million was imposed, and admission that more
borrowing would be done to close the Budget gap.
NO NEW INVESTMENT
Apart from the start-up of the Highway 2000 project and the divestment of Sangster International Airport, there is no sign of any significant new investments, either in the pipeline or on the horizon, that can give any great impetus to large-scale job creation or foreign exchange earnings, which are critical ingredients to rescuing Jamaica from its present fiscal crisis.
DECEPTION
What we are now sure of is that the country was deceived by Prime Minister P.J. Patterson Dr. Davies who told us that the country had "achieved macro-economic stability and was poised for growth".
In Parliament last week, I asked the Finance Minister the following questions:
- When only $2 billion was put in the Budget for salaries, did he not
know that he planned to pay out $10 billion in back-pay to the public sector,
and was this done between July and September? He failed to respond.
- Did he not know at least by the second quarter that revenues were
off by 10 per cent? Again he failed to respond.
- Did he not know that he had failed to raise some US$222 million or
J$11 billion on the overseas market as targeted? No response.
- Did he not know public debt charges would increase because his interest
rate targets were not being achieved? Stone cold silence.
- Did he not know that the consequence of all of this would be a failure
to meet the fiscal deficit targets set out under the IMF's Staff Monitored
Programme agreed upon last July? Silence.
Having been stumped in the debate on the Supplementary Estimates, the Minister retreated to his favourite debating tactic when he cannot answer questions or he does not consider it in his best interest so to do. He simply ignores the questions, waves them away and say that he is moving on to "substantive issues" as he did last week in the House of Representatives.
He then carries the deception further by implying that all of the issues raised by me, was information that was available in the Government's various publications. This is not correct.
In the first place, the published information from the Government is six to eight months late. For example, the latest information on the Government's accounts, average lending rates, and so on, are only available up to July of 2002. How would accessing this outdated information, which itself was published months after the general election, have helped us to convey the gravity of the situation to the Jamaican people?
How would we have known that the Minister was quietly paying out $8 billion more than budgeted, unless we had a "mole" at the Finance Ministry or he was man enough and principled enough to advise Parliament of his action, which was in total violation of the approved Budget?
But, while the Minister may have successfully deceived the people of Jamaica, the overseas risk assessment and credit rating agency, Standard and Poor's, has seen it fit to downgrade the outlook on Jamaica from "stable" to "negative", a move which has disturbing implications for the country's ability to raise funds, particularly at lower interest rates, on the international capital markets.
THE ISSUE OF ELECTRICITY RATES
An issue that is more than a storm in a teacup in these first 100 days is the rapid increases in electricity cost which are being blamed on rising oil prices and devaluation of the exchange rate.
It threatens to destroy what is left of the manufacturing sector and to trigger massive protests among bewildered consumers whose household bills have virtually doubled since December. We are now suffering the consequences of reckless policy-making in the energy sector.
On the positive side, dialogue has been taking place between the Government and the Opposition that, if followed through, will lead to breaking new ground towards reducing political tension and tribalism in the society. Two Vale Royal Summits have been held between Government and Opposition since the October 16 General Election.
The first 100 days of the PNP's fourth term offers very little hope for optimism that they have any better grasp on the fundamental problems that face us today.
Instead, the more things change, the more they remain the same. The Prime Minister is back to his old tricks. For example, he says will tolerate no corruption, but seeks unilaterally to exonerate a former Minister of Government after a Commission of Enquiry found him wanting.
The first 100 days are conforming to the standards of non-performance, mediocrity and deception that have been the hallmarks of this Government.
Audley Shaw is Jamaica Labour Party spokesman on finance.
