The Editor, Sir:

It was very interesting to note that the Minister of Finance was not impressed with Jamaica's economic report published by the Council on Hemispheric Affairs (COHA). The report implied that Jamaica's strategy of consistently financing national expenses through debt will soon be unsustainable, as the country is likely to reach a point where it is unable to meet those debt obligations. Consequently, the COHA report suggested that unless Jamaica makes significant policy changes, debt renunciation is very likely.

In light of Jamaica's poor economic performance over the years, it is not unreasonable to think that Jamaica might have to follow Argentina's example of debt renunciation at the beginning of the 21st century. Only weeks ago, Belize had to restructure its loans portfolio with local and international creditors, as its debt repayment strategy was becoming unsustainable. Belize's economic performance in terms of growth, inflation rate and debt to GDP ratio is much better than Jamaica's.

So, while Jamaica may receive better ratings from the international credit rating agencies, this cannot hide the reality of our economic situation. According to the international rating agencies, they are being very optimistic in Jamaica's rating. According to these reports, Jamaica's optimistic rating is based on its tight fiscal policies and its willingness to repay its debt. While this is all good and well, willingness to pay and ability to pay are two separate matters. The question is, how long can Jamaica continue on this path?

Profound recommendations

The COHA report made several recommendations which would increase Jamaica's growth rate. One of these recommendations was recently implemented by the Minister of Finance, that is, the decision that Government will guarantee a percentage of loans to small and medium-sized businesses which do not have the necessary collateral. This is a step in the right direction which just goes to show how Government can influence the economy with no direct spending. More of these policies are needed, and the COHA report made other profound recommendations, including increasing investment in national education and widening the tax net. These policies would certainly increase Jamaica's growth rate, both in the medium and long term.

Therefore, while Dr. Davies might not know what the credentials of the authors of the COHA report are, the report identifies real issues affecting the economy and offers valid recommendations which could put Jamaica on a growth path, similar to Argentina. I would suggest that, rather than simply discrediting the report, Dr. Davies should take it for what it is worth. A word to the wise is sufficient.

I am, etc.,

KEMMEHI LOZER (Mr.)

k_lozer@yahoo.com

35 Garfield Ave.,

Kingston 20