THE Private Sector Organisation of Jamaica (PSOJ) yesterday told the Government to bite the bullet and reduce its size in a new drive to cut costs, and warned that it should be cautious about imposing new taxes to finance this year’s budget — the details of which Finance Minister Omar Davies will disclose tomorrow.

“Additional taxes on already overburdened citizenry have to be a last resort,” the PSOJ said in a pre-budget statement in which it urged the administration to take tough decisions on spending cuts and reminded the Opposition of its responsibility to be in a position, at all times, to assume the Government.

“They must be in a state of readiness at all times and ready to govern,” the private sector umbrella group said. “A weak Opposition is dangerous to democracy as it allows mediocrity to prevail without the country having a credible alternative to encourage the administration in charge to consistently meet acceptable performance standards.”

Apparently expecting that the P J Patterson administration will see the remarks as a frontal attack on the Government, the PSOJ stressed that public criticism should not be “interpreted as anti-government or politically motivated”.

“We want our leaders to succeed,” the PSOJ, headed by Beverley Lopez, said.

Yesterday’s statement was against the backdrop of pressure on the administration to move aggressively to close the deficit on the budget, which, in the fiscal year that ended March 31, was about eight per cent of gross domestic product (GDP) — twice the initial estimate.

Davies has already said that he will slice about two percentage points from the deficit this year — bringing it down to six per cent of GDP — and close the gap altogether in 2005/2006.

But the expenditure side of the budget Davies presented to Parliament more than a fortnight ago calls for spending of $261.4 billion this year, an increase of $37.9 billion or approximately 17 per cent. In real terms, the budget is showing an increase of about eight per cent. Approximately 60 per cent of this budget is earmarked for debt servicing, up from 47.3 per cent in the previous fiscal year.

Markets have not been assuaged by Davies’ promise to slice into the deficit and at least one US rating agency has advised its clients to dump Jamaica Government bonds. At the same time, the Jamaican dollar has continued to fall under pressure, slipping 12 per cent since January, despite the central bank’s sharp hikes in interest rates recently.

The PSOJ said that while all Jamaicans had a role to play in stabilising the economy, the greatest burden rested with the elected Government.

“It must now focus on fulfilling its obligation to reduce its size, become efficient, operate within its resources and get on with its responsibility to educate, protect and establish an environment where businesses can thrive, create jobs, earning foreign exchange and pay reasonable taxes,” the PSOJ said. “Specifically, spending cuts and other acts of fiscal restraint are clear demonstrations of a new-found political willingness to act decisively. Let us implement the many consulting reports recommending the reorganisation of aspects of government.”

While conceding that it was impractical for the private sector to promote Government restrain and at the same time for the administration to spend on special interests, the PSOJ stressed that “incentives to encourage new investments and create jobs made sense”.

Added the PSOJ: “These actions are critical if confidence is to be restored quickly. The Government must be tough enough to walk the walk, deliver on its promises and we need to see evidence of meaningful successes early in this new financial year. Delays will be to our severe detriment.”

The private sector group also urged young leaders in the governing and Opposition parties, as well as the private sector, to build bridges over “the mistrust that currently exists if they wish to inherit a governable and growing country where the dreams and aspirations of all hard-working Jamaicans can be realised”.