Davies
FORMER HEAD of the Eagle companies, Dr. Paul Chen-Young,
has said that the government's short-sighted approach to financial
management led to the meltdown of the domestic financial sector.
Speaking at his book-signing at the end of last month in Coral Gables, Florida at Books & Books, the economist was highly critical of what he described as "strategic mistakes in policy" by the government.
"The first," Dr. Chen-Young said, "was the obsession in protecting the exchange rate at the expense of economic growth". This meant maintaining net international reserves at unrealistically high levels for intervention in the current market.
POLITICAL EXPEDIENCY
The second policy mistake, he said, was more fundamental. It was the government's disregard for financial prudence in favour of political expediency.
The former Eagle head said this continued even after the collapse in the domestic financial sector. "As the debt load was ballooning" he said "the Finance Minister (Dr. Omar Davies) unapologetically declared in 2002 at a function in his constituency that electioneering money had to be spent in the last general election to ensure victory for the PNP".
This resulted in the immediate downgrading of the country's credit rating in the international financial markets. Dr. Chen-Young also highlighted the government's arbitrariness in dealing with financial entities during the meltdown. He said that preferential treatment was meted out to selected companies without objective basis.
He said that Jamaica would feel the adverse effect of selling off the sector to foreign companies, instead of joint ventures with local companies. This, he said, will have a
negative effect on the Jamaican economy, and its balance of payments due to the repatriation of profits abroad.
