The 2021/22 budget debate shows that we have attained an important degree of economic and political maturity in the last decade. The main difference between the Government and Opposition is how big the primary surplus should be, not whether there should be one. This is a new and valuable convergence of policies.

There is growing support for Finance Minister Dr Nigel Clarke’s resolute refusal to “run wid it”. Higher public debt to increase spending by households may do more to raise imports than boost local production, and raise interest rates as government spending crowds out lending to the real sector.

The exchange rate will slide faster, more businesses will fail, and jobs will be lost. The poorest among us will be hit hardest. Jamaica was being encouraged by the International Monetary Fund and Inter-American Development Bank to increase borrowing to finance stimulus programmes like those in the USA and UK. We saw that as a mistake for our economy and did not comply. Well done, Mr Minister.

Mr Julian Robinson’s début as Opposition spokesman on finance was credible. He confirmed his agreement with the decision to hold the line. He did not take cheap shots by demanding big deficits to splurge on tax holidays, handouts and grants. He acknowledged the importance of keeping up public capital investments in infrastructure.

However, he made a vital point that found an echo in this week’s statement by the Jamaica Chamber of Commerce (JCC) calling for more support to prevent small businesses from failing and for more to be done to assist the most vulnerable who always fall between the cracks in already inadequate government safety net programmes.

The JCC also saluted the announced plan to lend money to small companies and buy part of their shares. However, the economic crisis has been so severe that many cannot service loans and may no longer be attractive to investors. They need a lifeline to keep them afloat for at least one more year.

The key question is whether Jamaicans would be better off if Dr Clarke were to dial back the fiscal target by just one per cent of GDP (about $22 billion) to do a better job of protecting the most vulnerable from the devastating impact of the pandemic, and to create a currently missing initiative to help small companies stay in business until the economy recovers. This would slow the reduction of debt, but it would also save lives and increase the rate of growth.

Jamaica survived the first year of the pandemic without any increase in the stock of debt. We salute Dr Clarke for this achievement which was possible because of the savings put aside from the years of austerity that preceded COVID-19 and from smart policy decisions like recapitalising the central bank. The problem is that this was not enough to prevent the economy shrinking by 10 per cent last year, and an estimated 12 per cent for last fiscal year.

The impact was a sharp increase in the ratio of debt-to-GDP from 94 per cent to 110 per cent. It had taken us two years to painfully bring it down to 94 per cent, but the magnitude of the recession erased that gain in a single year. The good news is that our economy is expected to grow by more than four per cent this year, so part of that loss will be reversed and this should continue to accelerate in 2023.

There may be merit in considering a lower fiscal primary target if the funds are carefully targeted to assist the poorest groups and prevent mass business failures that could jeopardise the financial system.

Keeping fiscal deficits low will allow Jamaica to recover faster from the pandemic, but too much austerity will cause households and businesses to fail. The challenge is to find the right policy mix.