Jamaica has done a tremendous job in bringing down its debt obligations and in this respect, is well regarded on the international stage.

Long gone are the days when Jamaica had a debt-to-GDP ratio of 147 per cent and 64 cents of every dollar had to go toward paying down the debt.

Progress has undoubtedly been made and Jamaica stands out as a good example of exhibiting fiscal discipline and management.

Today Jamaica’s debt-to-GDP ratio is at around 75 per cent with 28 cents in every dollar earmarked for debt payments. Minister of Finance Dr Nigel Clarke says this is still too high. The mission now is to get the debt-to-GDP ratio down to 60 per cent by 2028.

Comfort is taken in ten consecutive quarters of growth and continuous upgrades by the international rating agencies.

But there are those who say this one-dimensional approach and fixation on debt reduction does not allow for fully funded social welfare programmes or the undergirding of the Jamaican economy with national development projects. It does nothing to spur growth.

Business journalist Ralston Hyman has been an ardent critic of Dr Clarke’s approach and the way he has amassed surpluses while the country struggles with poor infrastructure, poor education, crime and anti-social behaviour.

He further buttresses his argument, pointing to our Caribbean neighbour, Barbados, having a higher debt-to-GDP ratio (115 per cent, falling by 14 percentage points last year) but a way higher productivity level than Jamaica and a functioning economy which incorporates national development projects. It has targeted getting down to 60 per cent by fiscal year 2035/36. Looking further afield, Hyman has drawn attention to Japan where its deb- to-GDP ratio is a whopping 250 per cent yet its economy grew by six per cent last year. Dr Clarke may retort that 22 per cent of its fiscal budget last year went on interest payments and debt reduction and that Japan has dropped to the fourth largest economy after Germany with 30 years of deflation coming to an end.

Hyman may very well say, the UK has a debt-to-GDP ratio of 100 per cent. The world’s top economy the United States, which everyone benchmarks themselves against has a national debt of US$32 trillion with a debt-to-GDP ratio of 120 per cent yet its economy is motoring along nicely.

To focus solely on debt-to-GDP ratios overlooks other economic indicators notably attracting investment, net liability and revenue derived from asset returns.

It has been levelled at Dr Clarke that his economic approach is far too conservative and that he needs to be more expansive and focus on growing the economy and attracting investments that foster greater productivity.

The Minister of Finance has repeatedly said that Jamaica as a small island state is vulnerable to exogenous shocks and that it must be a good bet with the international capital markets and here it must learn the lessons of the past. If a natural disaster should befall Jamaica, who can it turn to immediately? How can it resource recovery? You don’t just live for today, you have to consider tomorrow.

The issue came up at the recently held Mayberry Investment Forum held at the AC Marriott Hotel in Kingston where the Minister of Finance was the special guest speaker.

Mayberry Investments CEO Gary Peart put it to Minister Dr Nigel Clarke that there are those who hold the view that the debt is coming down too fast and that the resources used to address debt could be be put into productive areas.

Dr Clarke maintained that the target is 60 per cent and that it has to be met. Addressing the question, he said: “If you look at countries that are our size that are very successful and have vulnerabilities, you find debt ratios significantly below ours. There are quite a few which are below 60 per cent. Some have debt ratios of 40 per cent, 30 per cent even 20 per cent. What we are saying is your interest costs introduce inflexibility into your fiscal affairs. If something happens, it’s not that you can reduce the interest cost to respond to the crisis and that is why lower debt for a small, open, vulnerable country is often better.

“I don’t know if I can tell you what an ideal number is. What I can tell you though is we are focused on Jamaica’s laws as they stand today. And those laws as they stand today, are to achieve a debt ratio of 60 per cent by March 2028. That is what our policy is consistent with.”

The Minister of Finance let it be known that Jamaica is one of the few countries in the hemisphere where its debt is lower today than prior to COVID and Jamaica is on track to meet its best objective targets.

Honing in, Dr Clarke added: “ With respect to the pace of the debt reduction, the critics as far as I’m concerned are critics against success. We have successfully adhered to the laws of Jamaica. The fiscal balances that are targeted each year are not discretionary. The fiscal balance targets are programmatically determined by the law, so this business of I’m discretionarily reducing faster is inconsistent with the reality. It’s just not true.

“Each year we target a fiscal balance that is consistent with Jamaica’s fiscal rules and that seriousness of purpose, that commitment sends a message to consumers, citizens and investors that the government is serious about preserving an environment that is conducive to increasing economic investment, increased jobs. Wishy-washy speaking and speaking in a non-committal way about targets sends the wrong message to consumers, citizens and investors. That is counterproductive to the objectives we have outlined. We have been faithful to the fiscal rules that have been passed in Parliament and the fiscal architecture we have improved over time.”