Delroy ChuckTHE ECONOMY is in trouble, and things get worse daily. No one in government seems to understand how to stem the rot that is tearing the country apart and creates the hopelessness that one can see and feel throughout every nook and cranny of our beloved country. The country is in crisis and the leadership of our economic affairs does not seem to understand, or want to acknowledge, the deepening economic crisis.
That we are on the wrong economic track must be obvious to any economic dummy. Yet, this government seems intent on taking us even further along an economic path that can only result in further economic woes, more business failures and endless social disintegration. When will the powers that be acknowledge and understand that the economic policies are wrong and significant changes are needed? Who will bell the cat and provide the economic leadership to save the country from the impending chaos, unthinkable riots and foreseeable anarchy? When will the Government, and its apologists come clean, admit failure, acknowledge the crisis and seek a way forward?
It must be the Opposition's fault. Why are the Opposition spokesmen so silent? Why are they not providing the solutions, advice and guidance to the Government, so that the country can be put on the right path? People seem to forget that the 2002 General Election was less than four months ago and, wisely or unwisely, the Opposition's views were not accepted. Interestingly, less than three weeks ago, the Leader of the Opposition brought a motion to the House of Parliament to debate the failed economic model and to show the way forward, and in spite of the telling arguments, the motion was defeated. The Government still maintains it is on the right path and probably does not have the common sense and economic understanding to appreciate otherwise.
THE CRISIS DEEPENS
Now, the crisis gets even deeper. Less than a month after jacking up the liquidity ratio by five per cent, the Bank of Jamaica has to resort to even further monetary measures to protect a falling dollar by increasing the interest rate to 30 per cent. This is economic madness! The prolonged monetary measures have not worked, yet it is expected to work now. In spite of the protracted high interest rate, the dollar depreciates and will continue to lose value until it finds its true value or some settled equilibrium. Economic insanity has clearly overtaken or continues in the management of the country's affairs. No one, absolutely no one, can feel confident or have any bases for investing in this country, when the management of the country is so uncertain and unpredictable. How can anyone borrow money here without not insuring against bankruptcy? But is such insurance available? What signals do we send to investors and the rest of the world, when we put up interest rate from 18 per cent to 30 per cent? How can the productive, manufacturing, farming, in fact, any sector, survive at that rate of interest?
When the US Federal Reserve adjusts interest rate nowadays, analysts rarely expect a movement of more than one-quarter per cent and the interest rate in the USA, and around the world, still hovers around two per cent. What is the basis for the high interest rate of 30 per cent when inflation is in single digit?
A PANICKING GOVERNMENT
The government is clearly panicking, or has made another deft political move. With the dollar sliding uncontrollably, Bank of Jamaica probably sees the need to come in with a heavy hand to stem the slide, but will it work? No doubt, in the short term, investors will take advantage of the high interest rate and shift their monies from stocks and foreign exchange to local currency. Yet, wise and prudent investors will know that, in the long run, the dollar will continue its inevitable slide, and take advantage of any revaluation or stability in the local currency, to put their funds in a safe and secure currency. If the latter occurs, then what happens next? Surely, the crisis would deepen even further but that would happen after the impending Local Government Elections. Is politics, as usual, dictating economic decisions?
I am convinced that these unwise and imprudent economic decisions are simply to save the Government's political skin for a few months, as it goes into another election, and thereafter, all hell will break loose. This government has always acted in its best political interest. Economic decisions are not taken in the country's best interest, or to promote investor confidence, or to create wealth, or to inspire a favourable business environment. Uppermost in the minds of the country's present economic decision makers is the political consequence or fallout.
ROCK BOTTOM
Now, with politics dominating, the country can expect even more of the same. No jobs, no opportunities, and with the likelihood of more business failures, then even more unemployment and greater economic hardships. What will soon become clear is that, if this high interest rate policy continues, our indebtedness will balloon, another FINSAC bailout becomes inevitable, and more economic woes are in the offering. Just how much more the country can take before it explodes is an open issue.
Delroy Chuck is an attorney-at-law and Opposition Member of Parliament. He can be contacted by e-mail at delchuck@hotmail.com.
