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Samuda says Phillips only postponing the inevitable

BALFORD HENRY Senior staff reporter balfordh@jamaicaobserver.com

Friday, May 23, 2014    

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OPPOSITION spokesman on industry, investment and commerce Karl Samuda says that the Government has been living in a "fool's paradise" and engaging in a strategy of postponing the inevitable.

"The minister of finance has been confronted with horrible choices. On the one hand he knows that he has had to, literally, 'cook the books' in a 'double whammy' way in order to pass the March 31 IMF test," Samuda said, as he spoke in the Sectoral Debate in the House of Representatives on Wednesday.

"This was done by not only delaying the payment of bills that fell due and payable within last year's budget but, in addition, he dipped into this year's income by drawing down on the licence fees which were not payable until later in the year; this is a double whammy which is going to put greater pressure on the next test," he explained.

"What amazes me is that the IMF doesn't only allow him to do that, but praises him for doing it, knowing full well the size of the hole that he is digging until later this year," Samuda continued.

Samuda said that, during a meeting between the Opposition and the IMF team, he had asked the team whether "they were going to use the same old strategy of devaluation, this time around, that they have been using for the past 30 years".

"Their answer was simply to say that our dollar was heavily overvalued. This was the same dose of medicine they served up to former Prime Minister Seaga in 1984, who flatly rejected it, used a different strategy, and kept the currency stable for six years," he said.

"In the context of our situation, with dependency on heavily imported raw materials, a small local market and comparatively low levels of productivity, devaluation will not make our exports more attractive, but will bring grief and hardship on especially the poor, who have to absorb the ever-increasing cost of basic foods, clothing and shelter," he stated.

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