Jones
The chairman of the People's National Party (PNP) says the first two years of the Golding administration are the worst he has seen in Jamaica's history since Independence. This astonishing utterance indicates a remarkable attack of amnesia or a brazen disregard for the threat it poses to his credibility.
The years 1972 to 1974 were far more damaging; and what is more, it was the milestone at which Jamaica made the disastrous detour from the sunny upland to the valley of despair. Pickersgill was a partner in those years of costly social experimentation and economic mismanagement. How can he forget?
We should know where we are coming from. So let's check the rear-view mirror. During the first decade of Independence, Jamaica experienced the most prosperous economy in its history. Investments poured in, new factories were opened with amazing regularity, 100 schools were built and major hospitals constructed. The economy grew at an average six per cent per annum and national reserves were healthy. Jamaica's currency was valued higher than that of the United States. Many were happy, but the disgruntled complained that the prosperity was not properly shared.
The PNP was elected in 1972 with a promise to improve on the performance of the Jamaica Labour Party (JLP). However, within two years there was little to share; for the reserves had dwindled badly and production began to slow down. How can Pickersgill forget the state of Jamaica after the first year that his party was in office? The words of the official Government Economic and Social Survey should remind him:
"During the year 1972 the Jamaican economy came under several influences which adversely affected its performance; important among these were declining inflows of private capital investment … depression in the world market for aluminium ... instability of the international monetary environment and persistent inflationary pressures in Jamaica's major trading partners.
"The immediate effect of these factors was reflected in sluggish growth of investment, rapid increase in price levels and deterioration in the balance of payments."
1973 was worse
The following year - 1973 - was worse. Let the records of the Economic & Social Survey speak: "1973 was not so much a year in which the aim was to achieve economic growth in real terms, as it was a year in which the major struggle was to keep real growth rates from declining too much. In other words, 1973 was a year of survival … "
The survey said prices increased an average of 20.4 per cent in the rural areas and 19.2 per cent in the Kingston area during 1973 … there was a slump in manufacturing production ... External factors inflated the cost of imported goods and pushed imports up to $604.1 million, or by 22.5 per cent. Wages and salaries increased by 20 per cent compared with 13.8 per cent in 1972.
There was an increase of some 30 per cent in Government expenditure, of which deficit expenditure played an important role. During the financial year the estimated deficit was $115.3 million, or an increase of 30 per cent.
There was a deficit of $223.1 million on the current account which could not be covered by capital movements; therefore, there was an overall deficit of $263 million which had to be paid for with foreign-exchange reserves.
There was an increase in the unemployed labour force of 6,400 between April and October. Net borrowing from abroad, a sizeable part of which went to government and quasi-government institutions, rose by 41.5 per cent.
Those two years, as unblinkered observers can discern, were years of hardship for Jamaica. Despite the printing of money and the enormous inflow of funds from the bauxite levy imposed in 1974, the situation deteriorated to the point where in 1979 the Economic and Social Survey reported: "The Gross National Debt had increased by over 30 per cent every year since 1973." How can Pickersgill forget?
In assessing the first two years of the Seaga administration, we must consider the state of affairs when he took over at the end of 1980. This is how the Government's survey summarised it:
"The major influences affecting economic performance in 1980 relate directly or indirectly to the shortage of foreign exchange. Inflationary pressures persisted as a result of the general imbalance between the demand for and supply of goods and services and high levels of deficit spending. Import restrictions severely affected the supply of both consumer goods and material inputs for the productive sector.
"The foreign-exchange constraint was aggravated by the Government's decision to discontinue negotiations with the International Monetary Fund. This, coupled with an already prevailing lack of confidence by investors … seriously affected the level of economic activity, particularly in manufacturing, construction and tourism … "
How can Pickersgill forget?
The first two years of the Seaga administration were spent repairing the shambles left behind in 1980. The new government took some unpopular steps, but nobody should deny that Jamaica began recovering during the period. Proof of his success is evident in the 1987 survey's report made near the end of his time in office:
"Indicators of Jamaica's economic performance suggest that the forward momentum which began to develop in 1986 accelerated in 1987 … the Gross Domestic Product advanced for the second consecutive year, recording real positive growth estimated at 5.2 per cent. This achievement was accompanied by favourable changes in the external and fiscal balances, substantial reduction in inflation and in the level and rate of unemployment."
This progress was suddenly halted in 1988 by the devastating Hurricane Gilbert. Rebuilding began promptly, but in the following year the electorate voted Seaga out and returned power to Michael Manley who, by then, had promised to mend his way of governing.
no dispute
The result of Manley's first two years in office is not in dispute. What is relevant is the state of the country about the time Golding took over. The present administration has not been strident in letting the public know, so we may be guided by the Caribbean Development Bank, which reported:
The year 2007 has been a particularly challenging one for macroeconomic management in Jamaica. In spite of upbeat expectations at the start of the year … real output growth slowed in 2007.
A faltering US economy … coupled with spiralling energy costs and the impact of Hurricane Dean, weighed heavily on the country's growth momentum.
Agricultural supply shortages precipitated by severely adverse weather conditions, together with rising import costs and marginal depreciation of the domestic currency, led to a pick-up in inflation.
Excess liquidity conditions triggered Central Bank intervention and a marginal tightening of monetary policy. Preliminary estimates also point to a weakened external balance.
Hurricane damage led to a loss of critical export capacity … while a reduction in tourism arrivals and remittance inflows resulted in a worsening of the current account balance.
The net international reserves position declined to a four-year low of $1.9 billion.
Underlining this, the purchasing power of the Jamaican dollar had fallen disastrously. In 1989 it cost J$5.50 to buy one US dollar. In 2007 it took more than J$80 to buy a US dollar.
How can Pickersgill forget?
Ken Jones is director of communications in the Office of the Prime Minister.
Pickersgill