In 2012, the newly elected Government will have to make very difficult political decisions which successive administrations have postponed. These decisions centre around the fact that the nation has been living beyond its means through local and overseas borrowing.

The national debt reached a point in 2011 when the debt/GDP ratio was in the region of 130 per cent and debt-servicing required about 50 per cent of the budget, a clear sign that we have reached our borrowing limit.

The Golding administration, to its credit, switched from borrowing from expensive commercial sources to very low-cost, long-term development bank sources. Yet, commendable as this is, it is still borrowing, even though it is understandable that some borrowing is necessary in the context of a global economic crisis and a national economy struggling to achieve measurable economic growth.

Jamaicans can also be commended on the successful implementation of the Jamaica Debt Exchange, a remarkable and unprecedented debt restructuring in which 99 per cent of bondholders voluntarily agreed to exchange the existing bonds for new bonds with a lower interest rate.

We suggest, of course, that this success was less about patriotism and more about self-interest because bondholders got a safer asset at a lower interest but at a rate still better than alternatives available in the international capital market. Bondholders may not be as co-operative if they are approached a second time.

Come next year, the ability to borrow is going to be more limited, even with an International Monetary Fund (IMF) pact and continued support from multilaterals such as the World Bank and the Inter-American Development Bank. Any inadvisable borrowing from commercial sources would be expensive. Therefore we are at a point of little or no recourse to borrowing while the existing debt has to be serviced to bring it down to manageable levels.

The foreign debt has to be repaid in foreign currency. Inflows of foreign exchange are: exports, tourism, remittances, foreign investment and borrowing from abroad. Significant borrowing from abroad is not an option for a highly indebted country such as Jamaica. Tourism, remittances and foreign investment are not likely to increase substantially in a global economic crisis. The only viable option, therefore, is to increase exports.

Increasing foreign exchange earnings from exports will require increased earnings from existing export sectors, in particular bauxite and sugar, both of which will have to produce higher output. There are prospects, but not for a dramatic increase.

New export sectors will have to be identified and developed, but this takes time. Short to medium term prospects include healthcare, retirement communities, agriculture, entertainment, culture, informatics, higher education and port services. For this to be accomplished an export development strategy needs to be formulated and its implementation made a priority of the next Government.

The export drive should be accompanied by measures to reduce imports, especially of products that can be produced here. Import substitution saves foreign exchange with the best and easiest possibilities being in domestic food production. Jamaica can produce all the onions, Tilapia, etc that it is now importing.