Dear Editor,
This is an open letter to Finance Minister Peter Phillips:
With all due respect Minister, the Jamaican people do not need another bureaucracy to stabilise the Jamaican dollar. Just peg the dollar to the US dollar, like Cayman and The Bahamas. The Jamaican economy is not fundamentally different from these economies and they are doing great.
It is quite clear from the combined effects of a devalued dollar and low oil prices our exports should be booming. But this is not the case, therefore it is no longer feasible for the Government of Jamaica to leverage the competitive edge of the Jamaican economy on cheap wages and constant devaluation. The net impact of such policies over the years are high crime rate, very high levels of poverty, and an increasing foreign debt-to-GDP ratio.
It would seem to me that the Government and the International Monetary Fund (IMF) have concluded that constant devaluation was affecting our ability to maintain an acceptable debt-to-GDP ratio; perhaps the most structural impediment in our fiscal and monetary policies to growth and development. The only focus for the Government is to reduce the cost of energy and forget about reducing the debt it is the classic chicken or egg scenario.
"The Jamaican dollar which started the year at $114.66 to the US dollar has so far lost nearly two per cent, with inflation at roughly zero, the currency has gained a bit in competitiveness this year as well as since October last year with negative inflation between then and December." (IC INSIDER.COM)
It only stands to reason that in a speculative market there is no future parity or hopes of having a strong Jamaican dollar, as Jamaican investors find it is far more lucrative to invest in foreign currency trading than to invest some US$10.3 billion annual (total value of currency trading per year) in the productive capacity of the nation in terms of energy, manufacturing and infrastructure investments.
The volume of currency trading is greater than the average annual take-home income of the Jamaican workers by 68 per cent, as the currency investment dealers are earning an average of five timed the average hard currency inflows annually from remittance, which should have been reinvested in the development of our economic base but rather invested in a sector of the economy with little or no productive value, as a whole, since only a few wealthy Jamaicans can participate in currency trading.
Without a change in this economic trajectory, we will never be able to pay off our IMF loans or repay the Chinese, as constant devaluation invariably increases the cost and size of our national debt.
Unless there is radical reform to our financial markets, like pegging the Jamaican Dollar to the US dollar, the economy will be like a sinking cargo ship loaded with tons of debt, and the Jamaican people will become chattel slaves for another 300 years or more.
Silbert Barrett
net_sbarrett@hotmail.com
Peg it!
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This is an open letter to Finance Minister Peter Phillips:
With all due respect Minister, the Jamaican people do not need another bureaucracy to stabilise the Jamaican dollar. Just peg the dollar to the US dollar, like Cayman and The Bahamas. The Jamaican economy is not fundamentally different from these economies and they are doing great.
It is quite clear from the combined effects of a devalued dollar and low oil prices our exports should be booming. But this is not the case, therefore it is no longer feasible for the Government of Jamaica to leverage the competitive edge of the Jamaican economy on cheap wages and constant devaluation. The net impact of such policies over the years are high crime rate, very high levels of poverty, and an increasing foreign debt-to-GDP ratio.
It would seem to me that the Government and the International Monetary Fund (IMF) have concluded that constant devaluation was affecting our ability to maintain an acceptable debt-to-GDP ratio; perhaps the most structural impediment in our fiscal and monetary policies to growth and development. The only focus for the Government is to reduce the cost of energy and forget about reducing the debt it is the classic chicken or egg scenario.
"The Jamaican dollar which started the year at $114.66 to the US dollar has so far lost nearly two per cent, with inflation at roughly zero, the currency has gained a bit in competitiveness this year as well as since October last year with negative inflation between then and December." (IC INSIDER.COM)
It only stands to reason that in a speculative market there is no future parity or hopes of having a strong Jamaican dollar, as Jamaican investors find it is far more lucrative to invest in foreign currency trading than to invest some US$10.3 billion annual (total value of currency trading per year) in the productive capacity of the nation in terms of energy, manufacturing and infrastructure investments.
The volume of currency trading is greater than the average annual take-home income of the Jamaican workers by 68 per cent, as the currency investment dealers are earning an average of five timed the average hard currency inflows annually from remittance, which should have been reinvested in the development of our economic base but rather invested in a sector of the economy with little or no productive value, as a whole, since only a few wealthy Jamaicans can participate in currency trading.
Without a change in this economic trajectory, we will never be able to pay off our IMF loans or repay the Chinese, as constant devaluation invariably increases the cost and size of our national debt.
Unless there is radical reform to our financial markets, like pegging the Jamaican Dollar to the US dollar, the economy will be like a sinking cargo ship loaded with tons of debt, and the Jamaican people will become chattel slaves for another 300 years or more.
Silbert Barrett
net_sbarrett@hotmail.com
Peg it!
-->