The Editor, Sir,

The paradox of being naive in matters of economics while being politically clever at the same time has been an evident feature of Jamaican politics.

When considering the background of state minister in the Ministry of Finance, Senator Don Wehby, one would expect a reversal of the fore-mentioned characteristics. It was, therefore, very surprising that the senator in his address to the gathering at the Scotia DBG investment seminar on May 12 displayed the political cleverness of not acknowledging the government's intended commitment to enter into a borrowing relationship with the International Monetary Fund (IMF).

exploratory probes

He was careful to point out that all the to and fro visits to the IMF were merely exploratory probes to determine what we could get and on what terms, should we really need the IMF's lifeline.

Considering the unpopularity of the IMF with the majority of Jamaicans who perceive them to be the architects of suffering for working people, the senator's skirting around the issue is politically understandable. Albeit that the revised credit rating issued by JPMorgan is based on Jamaica having a borrowing relationship with the IMF. Logic would suggest that JPMorgan must have had more than a hunch for them to stick their neck out to upgrade our credit rating when all our foreign-exchange earning sources were in steep decline.

In the foregoing circumstances, one could be excused for believing that the existing relationship with the IMF is already beyond exploratory talks, and the formal announcements and public signings would be done at a politically more appropriate time. This presumption is reinforced by the senator's public disclosure that his worse-case projection is that the NIR could fall from its present US$1.6 billion to $800 million by the end of the financial year.

economic repercussions

This sort of disclosure coming from a junior minister of finance has economic repercussions. Any person who has foreign debt or must find foreign exchange to carry on their business will forward buy as much US dollars as they can afford or get; whichever is more. This demand pressure will induce a slide in the value of the Jamaican dollar. Left unchecked, this will create a serious cost in Jamaican dollars on our foreign debt stock and its interest charges. But there are also costs if the Bank of Jamaica decides to intervene, among them will be further decline of the NIR.

It is public knowledge that our foreign exchange inflows will severely contract while our outflows will not be reduced to the same extent; and since neither the economy nor the people can withstand the impact of the inability to procure the necessities of the economy, the IMF - the banker of last resort - must be brought into the loop. Sadly, rather than taking a decision in a timely fashion, the Government has opted to play the political hide-and-seek. Business people will not and cannot procrastinate so their response will bring about further devaluation of the Jamaica dollar and, naturally, there are consequences that go with it. While Nero fiddles, Rome burns.

Honest acknowledgement of our economic position accompanied by prompt decision on the relationship with IMF would have reduced or prevented the loss of confidence to the extent which it is going to cost us in the magnitude of the devaluation that will arise. As always, the nation pays for the games politicians play in putting politics ahead of economics.

I am, etc.,

LUCIUS C. WHITE

Kingston 6