By McPherse Thompson, Assistant News Editor
Davies: What I do know is that the reputation of crime and violence plays a critical role in reducing the level of investment.
FINANCE MINISTER Dr. Omar Davies does not believe the average Jamaican understands that the harsh measures he has taken to close the budget deficit will cause the country's economic conditions to improve over time.
In contrast, he said the island's creditors were fully aware that the tax measures would hurt in the short run, but would serve to improve conditions in the long run.
In an interview with LatinFinance magazine, the Finance Minister bluntly said "no", when asked whether Jamaicans understood the rationale behind the measures he has taken, including the imposition of a $14 billion tax package for fiscal year 2003/2004. However, Dr. Davies added: "That is what my creditors, external and internal, understand, but [the average citizen] does not."
The latest issue of the magazine, circulated to participants during last week's Euromoney and LatinFinance Caribbean Investment Forum in the Dominican Republic, focused on the Caribbean's sluggish growth, but more so on Jamaica's economic indicators, saying that it faced the toughest economic battle in the region.
CRIME BLIGHTING KINGSTON
And even while some of Jamaica's key functionaries, in keeping with the theme of the conference to increase investment inflows, were trying to sell the island as the premier investment destination because of, among other things, attractive incentives and a highly-skilled workforce, the magazine drew attention to Jamaica's "foetid slums and frighteningly high levels of violent crime", which, it said, "blights Kingston, the capital, in a harsh contrast to the country's idyllic coastal resorts."
It also drew attention to four major floods the country suffered last year, as well as the high unemployment rate. "Growth has averaged 0.5 per cent since 1997 and last year the economy sputtered along at two per cent," it said, adding that was even though the Government ramped up spending ahead of elections in October.
Asked if he received unfair criticisms for overspending and creating the fiscal deficit, Dr. Davies told LatinFinance: "I think politically, the Opposition feels if they wound or damage me they damage the Government. But the fact is, when you make an error you have to take your punishment and move on."
HURTING LEVEL OF INVESTMENTS
As to the fundamental changes required for Jamaica to realise a better economic outlook, the Minister said: "One critical thing is the reduction of the levels of crime and violence. What I do know is that the reputation of crime and violence plays a critical role in reducing the level of investment. We have to rid the country of this reputation and the benefits will follow."
But Richard Francis, analyst for Standard & Poor's, warns that the deficit, which came in much higher than expected, would be hard to reverse, given the Government's high level of debt. "The deficit has caused a vicious cycle with a depreciating Jamaican dollar and higher interest rates," said Francis.
However, in the article, entitled 'Rebuilding growth', Carl Ross, senior managing director of Bear Stearns, who was present at the Euromoney conference, felt that while a lot of money was spent, it is unfair to say it was frittered away as Jamaica had some unfortunate incidents, including the flood rains of May and June and then between September and October, last year.
The Government's fiscal measures notwithstanding, LatinFinance quoted Christian Stracke, head of emerging markets at New York research institute CreditSights, as saying that "investors would still much rather a bold approach on the expenditure side than further pressure on the economy through increased tax revenues."
The Caribbean Investment Forum, attended by about 500 delegates, was held at Casa de Campo, La Ramona and brought together Caribbean political leaders, business heads and international investors to promote the mission of investing in an integrated future for the region.
