Lopez
Last week, the President of the PSOJ, Mrs. Beverley Lopez was the special guest speaker at the PSOJ/AAAJ Advertising Effectiveness Awards launch hosted by Arnold Foote. She took the opportunity to address the weaknesses in the economy and called for an economic model that would generate growth and long term stability. Below is the full text of her speech.
LADIES AND gentlemen, during the past year, the PSOJ has been extremely vocal in speaking out against crime and violence. Today, I wish to focus on our economy, but I would be remiss if I did not touch on the issue of crime as this continues to have a negative impact on business.
In Jamaica, last year, 1,045 people were killed violently and for the year to date, 233 persons. We have the highest murder rate in the Caribbean and stand fourth in the world for the ratio of murders per 100,000 persons.
Under the leadership of Past President Oliver Clarke, the PSOJ has been working to create a stronger partnership between the security forces, the private sector and the people of Jamaica in "taking Jamaica back" from the criminal elements in our society. These initiatives include our monthly Phone-in Programme, regional and international drug seminars and more recently, Police Courtesy Weeks, to be held in each parish.
SOLVING CRIME
Police Courtesy Weeks have helped to raise the profile of the police in their communities. Some of these initiatives have started to bear fruit, but solving crime is everyone's business, and as such, we must be partners in the efforts being made to take back our country from the criminals and gunmen. We must use the vehicles available to us to provide information to the police (for example, Crime Stop) and give support to those members of the police force who conduct themselves professionally.
While the PSOJ intends to keep our focus on crime, we also need to address the state of our economy urgently. The Government has been in office for fourteen years, and to date, we still do not have an appropriate economic environment for businesses to invest, provide jobs and grow our economy.
This month, the business sector along with the international capital markets and global rating agencies, await with much anxiety the presentation of the national Budget. It is important that the government produce an effective, prudent and realistic budget - to cut expenditures and provide the appropriate policies and programmes for sustainable growth.
Our economic growth over the past ten years has been weak. While we have been able to get some of the macroeconomic variables right, these have not provided the additional stimulus required to generate consistent growth. We have a fiscal deficit of $33 billion and as of December 2002, total domestic debt of $351 billion and external debt of $222 billion. This high level of debt is not sustainable, and so we need to know how the government intends to address the fiscal deficit and spur growth in our economy. So far, the government's economic management, especially in recent times, has not done enough to boost investors' confidence. We all know high interest rates is a disincentive to investing in the real sectors.
INSTABILITY
Stability is a precursor for sustained growth in any economy and over the past three months, we have seen a re-emergence of instability in both interest rates and foreign exchange rates. Since January to date, we have had an approximate 10.3 per cent depreciation of the Jamaican dollar against the US dollar. In response to this slide last week Wednesday, the Central Bank introduced repo's to the market at a high of 35.95 per cent for 365 days... these levels of interest rates have not been seen since 1996. Cash rich investors were delighted, while investors and depositors clamoured for higher rates from their financial institutions, while there has been a decline in the equities market. These conditions are creating negative ripples in the marketplace, and we sense a disconnect between the Ministry of Finance and Planning and the Bank of Jamaica.
IMPLICATIONS
Ladies and gentlemen, the implications of these measures are far reaching especially given the level of our debt portfolio, and our lack of fiscal constraint. The continuation of such instruments, along with our inability to manage our debt and other global issues, will ultimately lead to increased lending and inflation rates, which will have further negative effects on the economy. Analysts agree that the solution lies in reducing the fiscal deficit. It is therefore even more critical that the upcoming budget address this issue in a meaningful way.
The fiscal targets which have been set over the past two years were not achieved. We have not met our growth targets. As a country, we continue to live beyond our means, borrowing "from Peter to pay Paul". The recent public sector salary increases is a prime example of imprudent fiscal management. In simple business language, "How can we give increases at such levels when there is no money in the bank account and the business is losing money?"
As the Minister prepares to table the budget, we expect that specific achievable targets will be laid on the table as to how we will address the growing fiscal deficit, how tax payers will get value for money; what are the new strategies that will be introduced to collect existing taxes by bringing the informal sector into the tax net, rather than to burden the legitimate companies who are meeting their obligations... we need to shift the advantage to those who comply. Additionally, no new taxes should be considered without the freezing of the public sector wage bill, among other spending items.
TWO DILEMMAS
Fellow Jamaicans, we are faced with two dilemmas, on one hand we continue to consume more than we produce, and on the other, the government continues to spend more than it earns. We must address both these issues with a great sense of urgency if we are to survive and compete in the global market.
All is not negative in our economy today, most listed companies have shown an increase in profitability; we have received investments in the telecommunication and tourism sectors, our country has had three years of growth though anaemic, per capita consumption has increased and some companies have been growing as evidenced in the PSOJ Job Creation Programme. Since January 2002, thirty-eight companies have been presented with Job Creation Awards at the monthly PSOJ/Cable & Wireless Awards Ceremonies. These companies, from a variety of sectors, including manufacturing, telecommunications, tourism, security, fast food operations and retail, have all created at least twenty-five new sustainable jobs in the past year. These are companies who have remained relevant in these challenging economic times and are continuing to improve and employ staff, ultimately for the betterment of our country.
The recent Government retreat attended by the broad private sector was concluded with the Prime Minister's agreement to include private sector representation on the Development Council, to ensure direct involvement in the development planning process. The PSOJ pledges to get some positive actions from the retreat and work has started on this path.
PARTNERSHIPS
We encourage all parties to continue to work together to improve the partnerships between the government, the private sector, Jamaicans overseas and indeed, all Jamaicans. Let us adopt an agenda for Jamaica.
We must demand an economic model from our government which will generate growth and long-term economic stability and increased investment in the economy. They can only succeed in this through good governance, guaranteeing the rule of law, promoting the accountability, efficiency and transparency of the public sector and effectively tackling crime and corruption. We must hold them accountable to these standards by monitoring their progress and working together.
This is our country. A strong, stable and prosperous Jamaica is our dream.