Private sector officials will today have to pitch their case to a reticent JLP leadership as to why the Opposition should embrace a private sector-led effort to forge a social contract as a platform for sustained economic growth.

Edward Seaga, the Jamaica Labour Party (JLP) leader, told reporters yesterday that he has been invited to a meeting at which the private sector “will bring the documentation to say what the proposals are”.

A group, chaired by Private Sector Organisation of Jamaica (PSOJ) president, Beverly Lopez, borrowing from a process that proved successful in Ireland, has been attempting to craft initiatives that would help the government ease its debilitating debt burden, thus creating the environment for private sector investment and growth.

These talks, aimed ultimately at fashioning what the Lopez group calls Partnership for Progress, have already involved trade unions and, through back channels, officials of the P J Patterson administration.

But the Opposition JLP has been wary about committing to the discussions, fearing that it might be co-opted into giving, as Seaga put it at a party retreat on Sunday, “aid and comfort to the government”.

At the same time, JLP sources have conceded, the party is fearful of being seen as the spoiler in any broad-based programme that might have a shot at creating economic stability and long-term growth.

JLP officials have argued that the government should first put on the table its own offer to the other potential partners, before any Opposition engagement.

Seaga appeared yesterday to have unveiled the first of the JLP demands by insisting that the government state clearly what will be the public deficit for the fiscal year ending March 31.

“We say it is going to be 10 per cent [of gross domestic product],” Seaga said at press conference at the party’s headquarters on Belmont Road in Kingston. “The International Monetary Fund (IMF) says 8.3 per cent but the government said originally five to six per cent.”

According to Seaga, finance ministry figures had indicated a deficit of 10 per cent of GDP.

“So what is the true figure?” asked Seaga. “.We are not prepared to wait on the pleasure of the minister to determine when he is going to give the information to the country. The country wants the true information and we want it now.”

In the last fiscal year the government ran a deficit of 7.4 per cent of GDP, nearly twice the projected level, causing rating agencies to downgrade Jamaica’s debt and making the markets skittish about taking up government bonds.

Finance Minister Omar Davies promised to shave up to two percentage points off the deficit this fiscal year, but up to November, the deficit for the first eight months of the fiscal year was $29.69 billion, on an annualised rate of around 10.54 per cent.

However, analysts point out that the last quarter of the fiscal year is usually a good period of revenues for the government, which, when combined with Davies’ decision to slash the capital budget by a third, or $3 billion, could help narrow the deficit.

Tackling the public deficit is apparently a major element in the private sector initiative, which the Lopez group will likely share with Seaga today.

Although specifics of the plan have not been made public, people close to the group suggest that it could include Jamaican financial institutions converting up to $25 billion of high-cost government debt to cheaper, US dollar-linked instruments.

The expectation is that this would substantially bring down the cost of servicing the government’s $700-billion debt, ease the administration’s requirement to borrow and cause the lowering of interest rates. The private sector would then be able to borrow more at cheaper rates and be in a better position to invest.

But the government, in exchange, would have to give specific undertakings regarding fiscal management and the further divestment of entities.

In addition to these initiatives, Davies has been talking to public sector trade unions on ways to bring down the government’s wage bill, which now accounts for a third of the country’s budget. Suggestions have included both freezing wages and/or cutting public sector jobs.

Seaga stressed yesterday that there would be no easy passage for the administration and that it would be best to come clean if it is to build confidence.

“We all know, qualitatively speaking, that it is going to be a very difficult year next (fiscal) year,” the JLP leader said. “But the extent of the difficulties are not now known in quantitative terms. So we want the minister of finance to come clean with the country. Be transparent and be accountable and tell the people what is the likely deficit level for this year.”