The Minister without Portfolio in the Ministry of Finance declared that the devaluation of the Jamaican dollar was due to the effect of market forces; not the government's doing. It is, therefore, incumbent upon us to seek answers to this debilitating problem, which has been plaguing us for decades. The deterioration began from in the 1970s when the US$1 was fetching J$0.80 cents, and has stayed with us until today it takes J$76 to buy US$1. Sadly, it will remain for as long as it takes us to realise that neither the market, nor any foreign entity, is going to correct the problem.
In our current situation where we are indebted to the extent of between 125 per cent-140 per cent of GDP, with approximately 50 per cent of these debts are nominated in foreign currency, the continuous slide of the Jamaican dollar is a debilitating economic haemorrhaging, which increases the misery of the poor and the impotence of the Government to effectively deal with the real problems of the society. For these reasons, it baffles me that it can be deemed acceptable to have the value of the dollar left to the vagaries of the market, subjected only to the BOJ's intervention to inject some foreign exchange or adjusting interest rates. Where the demand continues to exceed supply, the political directorate must do more than say "it isn't me, it is the market double'. The political directorate has the responsibility to address the fundamentals of the economy to, at least, achieve equilibrium between supply and demand for foreign exchange.
Stagnant or declining production
Condensed to its simplest form, if our income from production and services, when added to remittances and grants, is less than that which we spend on imports and that which is required to service our debts, that gap is invariably filled by borrowing. The longer that situation exists, with a stagnant or declining production base, the greater the debt becomes. The greater the debt becomes, the greater proportion of our income will be required to service the debt, resulting in less resources being available to do the things required of Government. The longer we defer correcting the production/supply and the consumption/demand relationship, the worse the situation becomes.
The line must be drawn, at some time, to say our budget must no longer be crafted with a resource gap to be satisfied by loans, unless the loans are to be used to increase our productive base or improve our productivity. This requires fiscal discipline and honest efficient governance. The question arises: 'Who will bell the cat?'. By now, it should be very obvious that we will not be able to tax our way out, borrow our way out or, even more unlikely, to beg our way out of our dilemma. We must realise that if we adopt the posture of the ostrich and, by denial, bury our heads in the sand, it will in no way remove the eminent peril that faces us. We must increase our productive base. To continue to increase our debt, without increasing our productive base, is economic suicide
Demand for foreign exchange
Urgently, we must reduce our imports. We could start by increasing our local food production and consumption. Why has it taken us so long to develop an industry to meet our demand for the caustic soda, which the bauxite industry requires? We have all the limestone we need and a ready market. Is this not good enough reason to invest in such a product that will, in the very short run, reduce your demand for foreign exchange? Why are we not growing corn? Where are the investments in the agri-processing sector? This is where we will not only add value to our primary produce. We will add shelf-life and broaden our marketing possibilities. We cannot sit back and wait for foreigners to come in and take the initiative. We must start by taking the first step. We are required to do what is good for Jamaica, not to follow any ideological dogma that is not working to our advantage.
Quite often we are told "produce or die". It is a truism that has escaped many of us because we are dying slowly in economic terms. However, the imbalance between our consumption and low production is manifested in the continuous depreciation of our dollar and an ever rising of our debts. Can we rescue ourselves from drowning in debt? Yes, we can. In the words of our National Hero Marcus Garvey, "Rise up, ye mighty race. You can accomplish what you will."
I am, etc.,
LUCIUS C. WHITE