THE EDITOR, Sir:IN AN address to the Association of Surgeons in Jamaica on February 20, 2005, one of the country's leading financiers compared investments to a game of dominoes. He said, 'reading the fundamentals right is the key to successful investment.' The same can be said about devising economic policy.
Mr. Golding in his maiden speech as the new leader of the Jamaica Labour Party has not created any distinction between himself and the current administration. It is quite clear that he has no radically or slightly different economic programme from that now being pursued by this administration.
What is the difference between macroeconomic stability and macroeconomic harmony apart from the fact that the latter is a fabrication by Mr. Golding? It is accepted that the 1990s was a mixed period for the PNP and that there was some culpability with respect to the challenges experienced by the financial sector. It is further accepted that the debt burden is a by-product of the financial sector fallout.
However, what is certain is that we now have a better regulated and fast growing financial sector with a mix of international, regional and local companies which are much more profitable now than they were in the 1990s. There is also unprecedented confidence in the sector.
The PNP administration has been pursuing a low-inflation model for the last seven years. The administration has also been pursuing a low-interest-rates model. Sure there is need for accelerated reduction in the interest rates, but Mr. Golding should be aware that in the free market tradition, the Government relies primarily on signals to the market. It is now left for commercial banks to adjust their interest rates accordingly.
Whilst an independent central bank may be desirable, it is not a panacea, neither is dollarisation. Mr. Golding has not been a very good student of international economics. The policies currently being pursued are endorsed by the international monetary institutions and rating agencies.
When one looks objectively at the economic fundamentals, inflation is under control, the foreign exchange rate has stabilized, interest rates have been declining steadily during 2004 and the Net International Reserve is very strong. The major challenge facing the Government is the fiscal deficit which the Government has shown the resolve to correct.
It is exciting times for Jamaicans with some business acumen and business savvy. This is not about trickle-down economics.
There is recognition that access to capital could pose a challenge, but again this is not strictly a matter for the State. Private financial institutions must rise to the occasion and put their money where their mouths are and provide funding for small and micro business ventures. Financial entities can no longer hide behind the coat-tail of high interest rates or high inflation. Further, with the recent down turn in the stock market the next logical place to invest money is in businesses. The invisible hands will now have to do their work.
The reality of the situation is, those who are of the view that, 'nothing naaw gwaan' will be left behind and those with eyes and vision who are able to see that the economic model of this administration is bearing significant fruits will be the better for it. It would have been refreshing if the new Leader of the Opposition did not begin his maiden voyage with the same old tired gloom and doom rhetoric of his discarded predecessor. Is this a sign of things to come?
I am, etc.,
ARNALDO BROWN
Attorney-at-law
arnbrown07@hotmail.com
