In a very long budget speech that can only be described as a masterclass in public finance, Minister of Finance Dr Nigel Clarke outlined a key aspect of our economic history.

That history can be summed up by the fact that Jamaica’s per capita gross domestic product (GDP) is 20 per cent below where it was in 1972. Dr Clarke’s core argument was that Jamaica needs to ensure the next 50 years did not resemble the past 50 years of poor economic performance.

The day after Dr Clarke’s presentation, the Business Observer highlighted his comments on Jamaica’s historic break with decades of protracted recessions following shocks to the economy.

It is important that we all take note of the crucial role of Jamaica’s new-found macroeconomic stability in allowing our shortest-ever recovery period. Until now, it has taken up to 10 years for us to finally dig ourselves out of the holes created by successive crises. Successive governments had chosen to live from hand to mouth, so when shocks inevitably hit us we had no choice but to borrow more money.

This time was different. In 2019, the International Monetary Fund (IMF) popped the Champagne and toasted the successful completion of its programme here. However, even after its officials were safely back in Washington, DC, we stuck to the fiscal discipline that brought public debt down below 90 per cent of GDP from a high of about 150 per cent in 2013. We even saved money from privatisations and created buffers that allowed the Government to provide extraordinary support during the novel coronavirus pandemic without increasing debt. This time, for the first time, we were ready.

Interestingly, several of the Washington-based development banks openly and strenuously recommended that Jamaica confront the unprecedented demands of the pandemic by borrowing more from them. Most Caribbean countries followed that advice; however, Jamaica was able to stick to its guns and cap its borrowing. Partly as a result, our economy was able to restore lost employment in record time and economic growth is projected to recover completely by the end of this year.

We also note that, after almost a decade since it was first addressed, the minister is this year implementing the long-awaited reclassification of public sector salaries which, while welcome, appears to be at a significant cost. As he carefully outlined, the fact that Jamaica has one of the highest combined ratios of interest and wages as a percentage of GDP or total government expenditure in the region explains why we have had very little left over for other programmes and capital spending, which has hurt growth badly.

In short, the minister had to make choices. The taxation of gas remains the most efficient way of collecting revenue, and is a large number, so the targeted relief approach he outlined may be the least bad method of compensating those most affected.

But while the budget is credible, it is worth investigating and even accelerating further measures in terms of educational transformation or relief for the poor, particularly if revenues are higher than expected due to higher oil prices or inflation.