Two of the most important issues discussed in the 2012-2013 budget debate so far are the stifling debt and the Finsac crisis which also contributed to the debt problem. A lot of the money from loans was wasted or disappeared into the sea of corruption.

In his contribution to the debate, Finance and Planning Minister Dr Peter Phillips said that to compensate for the weak growth performance over the years we have witnessed a build-up of an unsustainable public debt stock which now stands at $l.7 trillion. This constitutes an increasing burden on Jamaicans and impedes our advancement as a developing country.

The debt to GDP, the value of goods and services we produced of more than 212 per cent in 1984 was reduced to about 109 per cent by March 2008. The ratio climbed back to about 131 per cent of GDP by the end of March 2011. This debt has now become a burden that places a stranglehold on our capacity to fund vital social services as well as the capital investments required to support sustained growth. Jamaica was classified as a highly indebted middle-income country with a debt to GDP ratio of 128 per cent at the end of March 2012. At the close of the fiscal year 2011-2012, the country’s total public debt stood at $l.7 trillion of which domestic debt was $912.6 billion and the external debt at $749.6 billion, or US$8.6 billion. This means that every Jamaica man, woman and child owes J$600,000.

Every well-thinking Jamaican must ask: How did we get here? And it is important that every Jamaican understands why our low credit rating is now the major obstacle to the country’s process of development, Dr Phillips said.

The truth is, he continued, we did not get here overnight. In the mid-1970s most of the debt was owed to external commercial banks. By the late 1970s and early l980s, multilateral and bilateral agencies had become our major creditors. During the decade of the 1980s Jamaica’s debt was substantially increased by heavy external borrowing from commercial, multilateral and bilateral sources for public expenditure and for balance of payments support.

The situation was compounded by years of anaemic growth which added pressure to the fiscal resources and created debt-servicing difficulties. In the decade of the l990s, the increased reliance on domestic borrowing led to a sharp increase in the stock of domestic debt. In dollar terms the debt moved from $11.9 billion at the end of March 199l to $139.2 billion at the end of March 1999. Contingent liabilities also played a significant part in the growth of domestic debt, particularly with the assumption of the debt related to the financial sector crisis of the late 1990s which accounted for 40 per cent of the goods and services we produced.

Simultaneously, our debt to GDP ratio also increased by 53 percentage points from 71 per cent of GDP at the end of the fiscal year 1996/97 to 124 per cent at the end of the fiscal year 2002/2003. That was the cost of the Finsac rescue of the financial institutions. There was a decrease in the early part of the 21st century, but the debt to GDP ratios again moved sharply upwards from approximately 109 per cent of GDP in 2007/2008 to 128 per cent of GDP at the end of the fiscal year 2011/2012.

Dr Phillips should be credited for giving us an accurate summation. But the story does not end there. A lot of the money from the loans was wasted or went down the drain of corruption.

Finance minister falters

The finance minister faltered when he did not allocate any money in the budget for the continuation of the Finsac Commission of Inquiry nor gave any reason in his presentation for not doing so. I tried to find out why but I heard no reply from the minister. However, an impeccable source in the ministry told me that the minister is to meet with members of the commission to discuss the future of the inquiry.

Thousands of people lost their life savings in the Finsac fiasco – the collapse of the financial sector in the 1990s. Some people either committed suicide or ended up insane. The people of this country want to know what caused the collapse and which politicians benefited from it.

Therefore, Jamaicans like myself who suffered were happy that Audley Shaw, the Opposition spokesman on Finance, Planning, Growth and Economic Development confronted Dr Phillips on the issue. Shaw asked Phillips to clear up the issue as to why it is that after two years of public hearings there is no budgetary allocation to finance the completion of the report into the collapse of the financial sector in the 1990s.

Shaw asked: “How can it be that a report of such importance, on an issue of such gravity, that must connect our past to our present and our future, can be summarily ignored by the government? There is no secret that while in Opposition the present government tried every means possible to shut down the inquiry. Can it be that in the midst of their solemn and contrite profession of transparency, they intend to muzzle the commissioners from writing and tabling the report on the collapse which saw the closure of over 40 financial institutions, closing 40 accounts with holders who would have to collectively meet at the National Stadium and we the people taking on board $140 billion in additional debt, and adding 40 per cent to our national debt as a percentage of the GDP? This led to the demise of our entrepreneurial spirit and the closure of thousands of businesses, putting thousands of people out of work.” Shaw called on the minister to correct the situation immediately and publish the report. This is an important first step of the integrity of the government, he added.