Let's not squander the economic gains made so far

Let's not squander the economic gains made so far

Friday, December 20, 2019

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It's not that we had any doubt, but we welcome Finance Minister Dr Nigel Clarke's reassurance that the Government remains committed to the fiscal programme that has led to a steady improvement in the economy over the past few years.

Minister Clarke restated the Administration's responsible position in response to the latest upgrade of Jamaica's credit rating by Moody's from B3 to B2. The rating agency also changed Jamaica's outlook from positive to stable and cited the island's vigorous commitment to “fiscal consolidation and structural reforms” as well as the improvement of “debt structure limits risks associated with a high level of government debt” as the key factors pushing the upgrade.

In his response to this most positive development, Dr Clarke said it “represents an endorsement of the continued progress made by Jamaica in sound economic management and reduction of its public debt”.

He also said that the Government remains firmly committed to fiscal consolidation aimed at further reducing the country's public debt burden and to strengthening competitiveness and accelerating private sector-led growth through deep structural reforms.

These actions, he insisted, will further strengthen Jamaica's credit rating in the international capital market.

As reported in our story last Friday, fiscal consolidation has brought about reduced imbalances in the economy, while structural reforms such as inflation targeting, a free-floating exchange rate, and increased foreign exchange reserves have made Jamaica more resilient to economic shocks.

Additionally, Moody's recognised the Government's “disaster risk financing strategy” as a mechanism to protect budget resources which would normally be called upon after a disaster.

Ensuring Jamaica has the buffer is indeed a commendable move by the Government, given the island's susceptibility to natural disasters, particularly hurricanes, which, as we have seen in recent years, are growing in intensity and devastating lives, critical infrastructure, and economies in their wake.

But even as we commend the Government on its stewardship of the economy, we must caution against the temptation to engage in irresponsible spending in an effort to win elections which, it appears, are going to be called next year.

The country saw, and suffered, from that reckless “run wid it” mentality in the past. We should not again be plunged into that economic hole which destroyed many lives, businesses, and the country's reputation.

Against that background, we urge Minister Clarke to press the accelerator pedal on the creation of his proposed Fiscal Council which, as he explained, will be a permanent, independent, non-partisan institution created by legislation, staffed by competent, experienced and technically proficient individuals whose province it will be to help promote economically sustainable fiscal policies across political cycles.

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