Revealing the bitter medicine no one wants to take

Wednesday, February 01, 2012

Nobody knows the troubles I've seen

— from the famous American Negro spiritual

THIS would be a suitable opening statement for the press conference following the coming Cabinet retreat (unfortunate wording for a planning meeting). The People's National Party (PNP) may now be sobering up after their victory in the December 29 general election as the full effect of the current state of affairs hits them.

Things are much worse than one can imagine while in Opposition, and Drs Peter Phillips and Omar Davies, in particular, will be gnashing their teeth as more and more they take stock of their portfolios and find the proverbial cupboard empty. The medicine that the Jamaica Labour Party (JLP) warned about on the campaign trail is about to be revealed.

Dr Davies will find that what money has not already been spent has been committed by contract, and these either cannot be repudiated or would be costly to extricate from or re-negotiate. The new minister will find that there is little "gas" to put in the "JEEP" while being struck with a massive bill for the importation of buses. There are claims that both incompetence and corruption are involved. If there is corruption, this issue cannot remain as a political football with allegations being exchanged. It must be definitively settled on the basis of facts.

Dr Phillips finds himself with a massive budget deficit and a crushing level of debt; the servicing of which deprives of any capacity to stimulate the economy. The JLP administration presided over a broken International Monetary Fund (IMF) agreement.

After unprecedented support from the international financial institutions over the last three years, Jamaica has a much larger debt portfolio and only two quarters of economic growth of one per cent.

The new minister and Government will be forced to raise tax revenue, reduce expenditure and reconfigure a supplementary budget and a full budget by May. A new arrangement will have to be negotiated with the IMF by resolving all the very difficult issues relating to public sector wage bill and the size of the public sector, as well as wrap up the tax reform which started when the PNP was in office four years ago.

Dr Phillips will have to bear the "slings and arrows of outrageous fortune", namely what was termed as the misdeeds of his predecessor. He has to reassure the international financial institutions that they must continue their support and provide the bond rating agencies with plausible reasons not to further downgrade Jamaica's credit rating.

After the revelations of the sorrows the Government has seen, all Jamaicans will know. But the American Negro spiritual goes on to say that those who sing this refrain will survive and pass over this tribulation. So too can the Jamaican people.

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COMMENTS (14)

4/20/2012

Gasteroplix I think most couples feel the need to asitsfy others when planning their wedding but would rather do something else! Its a tricky one. At the end of the day its your own wedding and you should be able to do what you want. A bit controversial! And lets not get into the amount of money you need to spend on doing what you didn't want anyway!! Your crochet at the engagement party sounds brilliant! A lovely thing for people to remember you by!

2/14/2012

No more s***. All posts of this qaultiy from now on

Gary Holness
2/3/2012

As I watched Impact last night I heard the union reps saying that the bitter medicine cannot just be lay offs. He went on to suggest that all Jcans should give the Govt some $10K to support the budget. What non sense!!! These people cant understand that the reality is that we cannot do business as usual some drastic changes are required. PMSM/ Govnt needs to stop pussyfooting around the prob. and address the public, lay the cards on the table. Be bold PMSM, show us you truly love the poor!!

Gary Holness
2/3/2012

Lets be frank. Ja's problems started way before 2007. JA is meirly reaping the benifits of years of mismanagement and poor planning. It is this simple. If you earn a $10 and the cost of your exp. are $40 you have two choices, borrow cont. or reduce your exp. This is the immediate/ short term resp. Long term, serious R&D need to be undertaken by UWI, Govt, Private sector etc as to what viable ventures can be pursued that Govt can implement policies to support. Unions look out I see job cuts ahead

John Smith
2/2/2012

Is who write dis? Interesting style because it is written from the perspective of an entity which was in government and is now, not..?

0o k
2/1/2012

....oops I mean antidote!

0o k
2/1/2012

Couldn't happen to a nicer lot. No excuses. If they had not spent 18 years running Jamaica into the ground (according to the said Dr. Phillips), we would have been in better stead.
According to Comrade Hanna 74% of the countries that were in recession have moved on and is not complaining about it. The Comrades maintained there was no crises....Let them issue the cure for the bitter medicine!

Carlton Stewart
2/1/2012

We have to begin to look at using commodities as money.
The exchange whether fully or partially of commodities for work done must not be frowned upon. Workers use their remuneration to purchase goods and services, the only go between is the paper, which intrinsically is without value. Companies owing the state, could use their stocks to offset their debt or some of it. Whilst these commodities could be used to pay some workers whether fully or partially.

Meat Head
2/1/2012

@PL Bogle -- I couldn't agree more with you that austerity would be very bad medicine for us right now. Hopefully that is not what comes out of this. Unfortunately, we need to continue borrowing, but this time we need to invest in the economy instead of simply rewarding supporters.

PL BOGLE
2/1/2012

Jamaica’s economy is too fragile to withstand drastic spending cuts, the idea, popular among US conservatives and some European officials, that slashing government spending to reduce budget deficits will trigger a confidence-driven recovery may work in the US and Europe but not in Jamaica, budget austerity cuts will slow the economy, increase unemployment, and impose additional hardship on the very poor. The governments most create some leeway to use fiscal stimulus to create jobs in the short and long term. Social unrest will destroy infrastructure and deter investment.

PL BOGLE
2/1/2012

After two years of debt crisis and budget austerity cuts across Europe the number of Europeans out of work has raised to 16.5 million people. Unemployment in Spain reached a new high of 22.9 per cent in December. In Greece, joblessness was 19.2 per cent for October, and unemployment reached 13.6 per cent in Portugal in the final month of 2011. European leaders have come to realize that austerity measures, like those being put in countries like Greece, Italy, Spain and Portugal, risk stoking a recession and plunging fragile economies into a downward spiral.

Meat Head
2/1/2012

Strangely enough, the country may benefit from this setback. With a bare cupboard, govt.'s flexibility to reward the faithful is limited and many may defect, particularly in the garrisons. In response, the govt. may be obliged to abandon tribal politics and pursue policies that benefit everyone, with broad-based economic growth as the top priority. I would love to be a fly in the wall at this retreat.

Nejeeper KNG
2/1/2012

Many European governments like (Italy, Spain, Portugal and Greece) have had to enact strict austerity measures to battle unsustainable levels of deficit spending. Deep cuts in spending have helped Spain reduce its deficit 53% during the first half of 2011. There can be no disbursement of funds without what the IMF calls “proof of prior action." One of the requirements to be a part of the E.U. is the country’s debt has to be less than 60% of GDP. Jamaica's debt is 131% of GDP. Cont......

Nejeeper KNG
2/1/2012

…There are comrades jumping around when they hear the word “austerity” however they are very at ease with the idea of borrowing money to fund a program that will not generate any revenue. The evidence is now showing that reality is setting in and political promises will have to go on the back-burner. The policies are dictated by the lenders not the misleading politicians who have perfected the art of making many among us blindly dependent in a way that is destructive to the country. Over to U..?

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GCT to go down, white rum prices going up

Revealing the bitter medicine no one wants to take