AUDLEY Shaw has described as “erroneous and mischievous” former Prime Minister PJ Patterson’s claim that the former Jamaica Labour Party (JLP) Government responded too late to the global economic crisis in 2008.
Shaw, who served as the finance minister in the JLP Government, accused Patterson of trying to rewrite history and said that contrary to Patterson’s assertion, the steps taken by the JLP Government allowed the country to cope with the effects of the financial crisis.
Shaw was responding to Patterson’s commentary on the issue at a special sitting of the Jamaica Observer Monday Exchange on July 30.
“I believe when the signs were emerging of trouble in the international economy, which would have an adverse impact on Jamaica, we hesitated too long before taking appropriate action on the domestic scene. And as a consequence, by the time the size and the nature of the problems, and its impact on the Jamaican economy, became evident, we really had no recourse,” Patterson said.
“I can only say that I was disappointed in the extreme that we reached that point where the return of the IMF became inevitable,” added Patterson.
However, in a sharp response, Shaw, now the Opposition spokesman on finance, planning, growth and economic development, rejected Patterson’s argument.
“As minister of finance I led an aggressive re-engagement with the European Union (EU) and multilateral institutions, including the International Monetary Fund (IMF), the World Bank, the Inter-American Development Bank (IDB), the Caribbean Development Bank (CDB), successfully resulting in Jamaica receiving early and unprecedented access to low-cost project and development policy loans from the IDB and the World Bank.,” Shaw said.
“The first IDB loan of US$100 million was signed a few months after the JLP came to power, with another US$100 million from the World Bank soon after,” he added.
That policy of re-engagement, he said, “opened the doors to timely negotiations with the IMF in addition to critical decisions which we had the courage to make, including the Jamaica Debt Exchange (JDX) and the divestment of loss-making public entities”.
Shaw said that in total, the Government secured an agreement and brought into Jamaica over US$3 billion, most at low interest rates of less than 2.0 per cent per annum, from the IMF, the IDB, the World Bank and the CDB.
“This allowed us to cope effectively with the fallout in revenue and foreign exchange earnings due to the global economic crisis and, along with careful fiscal management, stabilised the economy with healthy foreign exchange reserves, a stable exchange rate for over two years, low inflation, record low interest rates at the central bank with mortgage rates cut in half and a return to growth in the economy,” Shaw said.
He also said that Patterson should respectfully keep quiet on the issue since Jamaica’s economy had suffered much more during the years when the People’s National Party formed the Government, than under the 2008 global economic crisis.
He said that after the PNP Government chased away the IMF in 1995, the economy collapsed and money supply was out of control.
“The exchange rate fell from $5.50 to US$1.00 to $70 to US$1.00,” Shaw said. “Inflation galloped to 80 per cent and interest rates averaged a disastrous 53 per cent in the 1990s. Beyond that, there was little or no growth in the economy and the entire productive and financial sectors collapsed, driving decent, hard-working Jamaicans into a state of poverty.”
Added Shaw: “In fact, most of the work we did between 2007 and 2011 was to clean up the mess left by previous PNP Administrations and less to do with the 2008 global economic crisis. Our high public debt, high interest rates and the lack of growth were there long before and are wellestablished legacies of… the PNP.”
He said that so bad was the record of economic governance that the present PNP Government “is clearly engaged in an effort to cover up the findings of the Commission of Inquiry into the financial sector collapse of the 1990s”.
“Now, instead of making erroneous and mischievous statements about Jamaica’s recent economic history Mr Patterson should introspect and apologise to the people of Jamaica for the pain, destruction and hurt that his failed administration brought upon the people of Jamaica,” Shaw said.