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JM | Jul 31, 2022

Fending off  brickbats: Dr Phillips takes heat for commending Government on its debt management

Al Edwards

Al Edwards / Our Today

administrator
Dr Peter Phillips.

Some say it is the greatest betrayal of the People’s National Party (PNP). Others say it is a case of sleeping with the enemy. Then there are the commentators who say that the lack of fiscal vision and inability to  spur the economy is what got Jamaica in this mess in the first place.

There can be little doubt that Dr Peter Phillips is one of the giants of Jamaican politics and arguably the best finance minister the country has seen in the first two decades of this new century. He has acquitted himself in every office of state he has held.

His brand of practical politics is incongruous with this new age, where personality and “likes” on Instagram are  determinants. And so, with a resounding defeat at the general election of 2020, the old lion licked his wounds and disappeared into the tawny-leafed undergrowth.

STILL A COMMANDING PRESENCE

But his is still a voice that should be paid attention to. His is still a commanding presence. His accomplishments have not dimmed by the mist of time. He remains a big beast in the political jungle.

Today, Jamaica has the unenviable task of managing its debt burden while providing a social cushion for those whose earnings still find them unable to survive escalating inflation, and a contracting economy.

These are unprecedented times. Following the COVID pandemic, came a war in Ukraine, supply chain problems, low global growth and, of course, double-digit inflation.

There are those that say the Government must be able to chew gum and ride the horse at the same time. In other words, don’t solely focus on debt reduction and forget about your responsibilities to Jamaican citizens.

It is said that J$40 billion should be made immediately available to provide a safety net for the more vulnerable.

MEMORIES OF ECONOMIC DEVASTATION

Such a move would put a chasm in the budget and increase an already reducing debt-to-GDP ratio (the country’s debt to GDP ratio is down to 94.2 per cent, a 15.5 per cent reduction from March 2021 when it was 109.7 per cent. The unemployment rate is now at six per cent).

Commentators argue, ‘yes, the debt must be addressed but at this time why not reduce the quantum payments until we are out of the woods’.

Some still remember the devastation wrought by the FINSAC era with astronomical interest rates. There are those that remember Jamaica being shut out of the international capital markets after the global financial crisis of 2008-2009. There are examples of what Jamaica must never look like – Sri Lanka, Pakistan, Venezuela, Argentina in 2001-02 where it reneged on its International Monetary Fund obligations.

Dr Nigel Clarke, minister of finance and the public service. (Photo: Facebook @Jamaica Stock Exchange)

Jamaica’s Minister of Finance Dr Nigel Clarke, whose fiscal management approach can be described as cautious yet prudent, will recall these events and will not want to see Jamaica fall into the abyss.

Phillips said: “I think it is important that we continue to manage our debt downwards and that our biggest bequest we could give to future generations is low debt as a country. That will enable the march of social transformation.”

For this it was said that Phillips betrayed his party, threw the current leader Mark Golding under the bus, an threw in his lot in with the Andrew Holness-led JLP.

Phillips is absolutely right and demonstrated the best case of consensus politics seen so far in this new millennium.

LESSON FOR JAMAICA

Some can remember when 64 cents in every dollar was earmarked for debt repayment. It is difficult to transform a country, embrace the digital age, put infrastructure works in place with that albatross around your neck.

Life must be made easier for future generations of Jamaicans. A good creditor can always knock on an open door. It’s a lesson that has taken Jamaica a quarter of a century to learn.

The problems that Jamaica has to grapple with now – and they were not of its making –  will require its best brains and talents coming together. It must not make the mistake that the US is currently encountering- gridlocked by partisanship.

Again, Phillips demonstrated his political and economic acuity: “Many people tend to see their choices as just the immediate choice – where is my food today. Those are very understandable choices. What the country has to do and be part of is a consensual decision making process on how we trade off those very difficult and agonising considerations against the long term need for social transformation and for coming out of the grip of poverty and backwardness.”

Indeed, that is Jamaica’s challenge. We now see a downturn in remittance inflows, there is a tightening of liquidity in the money markets, criminality is rampant and out of control, the seeds of social unrest are being planted, an ever widening trade deficit, falling business confidence.

Attending to social transformation comes at a cost and Jamaica will have to become more productive to meet it. The days of a Debt-to-GDP ratio of 147 per cent  and a primary surplus of 7.5 per cent are in the rear view mirror.

“Some may belittle politics but we who are engaged in it, know that is where people stand tall. And although I know that it has many harsh contentions, it is still the arena that sets the heart beating a little faster. If it is on occasions the place of low skulduggery, it is more often the place for the pursuit of noble causes.”

Tony Blair, former British Prime Minister

We don’t want that nightmare to become a reality again.

With his PNP colleagues casting resentful eyes at him and commentators shooting vituperative barbs, Dr Peter Phillips will do well to take succour from Tony Blair’s words at his last Prime Minister’s Question Time in 2007.

“Some may belittle politics but we who are engaged in it, know that is where people stand tall. And although I know that it has many harsh contentions, it is still the arena that sets the heart beating a little faster. If it is on occasions the place of low skulduggery, it is more often the place for the pursuit of noble causes.”

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