IT was almost a year ago that Prime Minister Portia Simpson Miller made the controversial remark: "If they could give (us) a bailout like Greece, Lord have mercy, you would see Jamaica grow and flourish." Yes, we laughed at the time, as clearly she didn't fully grasp the concept of a bailout or what it really meant, but still, her comment wasn't really far off.
A bailout may help the situation, but it comes at a hefty cost. It is like filing for bankruptcy to alleviate the pain of an extreme financial crisis, but credit rating will be downgraded and it may take years to recover and rebuild confidence with lenders, investors, etc. The practice of all those years (even decades) of excessive spending, heavy debt, corruption and mismanagement is finally bearing fruit. It was recently reported that a US paper, The Chicago Tribune, highlighted Jamaica's severe financial situation. The report also stated that Jamaica could actually face a crisis similar to Greece, if not worse. The situation in Greece and elsewhere is not pretty. Unemployment in places like Spain, also suffering a financial crisis, is almost 27 per cent, and it is far worse for young people under the age of 25, where it is currently at a staggering 57% and affecting even the well educated. There was also a recent media report out of Spain where many middle class persons, now out of work, would scout food market dump bins in the evenings after hours, looking for discarded food and produce to take home. This is the reality of these types of crises. Jamaica, be warned!
With debt of over $1.7 trillion, and most of Government spending going towards debt repayment, it is not surprising that the present Government, and those before, have not been able to make much progress in terms of national development. All we have is new highways, it seems, thanks to China. Jamaica has a culture of excessive spending, living well above its means. This is why the Government should have thought twice before appointing a top- heavy Cabinet, with more ministers than the previous Government. It is also why they should have delayed purchasing $60 million worth of new sports utility vehicles for ministers, even when they knew funds were tight. Most, if not all these ministers are politicians first, most are financially secure, they give back to the country through service (for the most part), at least they try. They may not be well paid, but their jobs come with many perks and benefits. In hard times, you require hard measures and setting priorities. Imagine an individual making a salary, and paying as much as 60% of his monthly earnings to repay loans and credit card debts, even as he continues to spend using additional loans. This type of scenario is geared towards bankruptcy and the Jamaican Government must take heed. There will be hardly anything left for other basic necessities. When this Government assumed office, it should have immediately toned down spending, yet we saw millions spent on Jamaica 50 celebrations, over $700 million reported. It was also recently reported that the Golden Jubilee Village at Emancipation Park cost $41 million. There was also $140 million expenditure on Jamaica House during the London Olympics, which hardly produced any viable returns. This is mismanagment at its best, given the current financial crisis. As much as 60% of per capita GDP, (value of domestic income per person) goes towards debt repayment. We cannot blame the IMF for our own shortfalls and inadequacies. The IMF is no different than a commercial bank, lending out other people's money, and setting strict rules and terms to safeguard their interests in loans in order to reduce the risk of default, and ensure that the borrower will be in a position to repay. The difficulty in reaching an agreement with the IMF means one thing --they are now imposing demands on the Government, which everyone knows will be extreme and unpopular. This could mean more public sector layoffs, selling of national assets, higher taxes etc.
The irony is, there always seem to be two Jamaicas -- one that's real and one that's not. We read the papers almost daily, and see lavish VIP parties being hosted, with socialites and jet-setters out in large numbers wearing the finest couture & nibbling the finest array of gourmet delights. We see events on the North Coast promoting the finest luxury champagne, like Moet and Chandon, (retail price US$60 a bottle). Fine life and living is an art if you can adequately afford it, but flaunting wealth is not healthy, especially to those who cannot afford it. We seem to thrive on a culture of luxury which is very pretentious in many ways. The media should be more responsible in feeding into this also, especially in difficult times. When does a private house dinner party, for instance, become news, just because it's the epitome of luxury? This same excessive behaviour creates excessive demand on scarce US$ forcing up demand, forcing up its value relative to JA$. We import far more than we export, or what we can really afford. The excess carries through to the Government spending. In First World countries, personal wealth is hardly flaunted. No one cares really about personal wealth; it's trivial and you mostly see this type of news reported in gossip-type tabloids. Jamaica has some of the finest mansions and luxury cars in the entire Caribbean, yet it trails far behind most of its Caricom counterparts in terms of national development and per capita income. Some Caribbean countries like Trinidad, Bahamas and Barbados not only enjoy higher standards of living, but have as much as twice our GDP. Until our people can realise that we must balance out our culture of excess, capitalise on our assets and strengths, and live within our means, the problem could actually become catastrophic.
The irony is, there always seem to be two Jamaicas -- one that's real and one that's not. We read the papers almost daily, and see lavish VIP parties being hosted, with socialites and jet-setters out in large numbers wearing the finest couture & nibbling the finest array of gourmet delights. We see events on the North Coast promoting the finest luxury champagne, like Moet and Chandon, (retail price US$60 a bottle). Fine life and living is an art if you can adequately afford it, but flaunting wealth is not healthy, especially to those who cannot afford it. We seem to thrive on a culture of luxury which is very pretentious in many ways. The media should be more responsible in feeding into this also, especially in difficult times. When does a private house dinner party, for instance, become news, just because it's the epitome of luxury? This same excessive behaviour creates excessive demand on scarce US$ forcing up demand, forcing up its value relative to JA$. We import far more than we export, or what we can really afford. The excess carries through to the Government spending. In First World countries, personal wealth is hardly flaunted. No one cares really about personal wealth; it's trivial and you mostly see this type of news reported in gossip-type tabloids. Jamaica has some of the finest mansions and luxury cars in the entire Caribbean, yet it trails far behind most of its Caricom counterparts in terms of national development and per capita income. Some Caribbean countries like Trinidad, Bahamas and Barbados not only enjoy higher standards of living, but have as much as twice our GDP. Until our people can realise that we must balance out our culture of excess, capitalise on our assets and strengths, and live within our means, the problem could actually become catastrophic.
The Government must therefore present a vision, a strategic plan with definable goals and plans to help boost earnings, employment, investment, and cut spending. Tax collection needs to be enhanced to broaden the net. My advice to the PM is to come clean with the Jamaican public, and deal with the situation head-on. Honesty and transparency must be the basis going forward, to gain any form of confidence. This grandeur and illusion of accomplishments in year one is just that, a mere illusion.
P Chin
chin_p@yahoo.com
The reality of Jamaica's debt crisis
-->
A bailout may help the situation, but it comes at a hefty cost. It is like filing for bankruptcy to alleviate the pain of an extreme financial crisis, but credit rating will be downgraded and it may take years to recover and rebuild confidence with lenders, investors, etc. The practice of all those years (even decades) of excessive spending, heavy debt, corruption and mismanagement is finally bearing fruit. It was recently reported that a US paper, The Chicago Tribune, highlighted Jamaica's severe financial situation. The report also stated that Jamaica could actually face a crisis similar to Greece, if not worse. The situation in Greece and elsewhere is not pretty. Unemployment in places like Spain, also suffering a financial crisis, is almost 27 per cent, and it is far worse for young people under the age of 25, where it is currently at a staggering 57% and affecting even the well educated. There was also a recent media report out of Spain where many middle class persons, now out of work, would scout food market dump bins in the evenings after hours, looking for discarded food and produce to take home. This is the reality of these types of crises. Jamaica, be warned!
With debt of over $1.7 trillion, and most of Government spending going towards debt repayment, it is not surprising that the present Government, and those before, have not been able to make much progress in terms of national development. All we have is new highways, it seems, thanks to China. Jamaica has a culture of excessive spending, living well above its means. This is why the Government should have thought twice before appointing a top- heavy Cabinet, with more ministers than the previous Government. It is also why they should have delayed purchasing $60 million worth of new sports utility vehicles for ministers, even when they knew funds were tight. Most, if not all these ministers are politicians first, most are financially secure, they give back to the country through service (for the most part), at least they try. They may not be well paid, but their jobs come with many perks and benefits. In hard times, you require hard measures and setting priorities. Imagine an individual making a salary, and paying as much as 60% of his monthly earnings to repay loans and credit card debts, even as he continues to spend using additional loans. This type of scenario is geared towards bankruptcy and the Jamaican Government must take heed. There will be hardly anything left for other basic necessities. When this Government assumed office, it should have immediately toned down spending, yet we saw millions spent on Jamaica 50 celebrations, over $700 million reported. It was also recently reported that the Golden Jubilee Village at Emancipation Park cost $41 million. There was also $140 million expenditure on Jamaica House during the London Olympics, which hardly produced any viable returns. This is mismanagment at its best, given the current financial crisis. As much as 60% of per capita GDP, (value of domestic income per person) goes towards debt repayment. We cannot blame the IMF for our own shortfalls and inadequacies. The IMF is no different than a commercial bank, lending out other people's money, and setting strict rules and terms to safeguard their interests in loans in order to reduce the risk of default, and ensure that the borrower will be in a position to repay. The difficulty in reaching an agreement with the IMF means one thing --they are now imposing demands on the Government, which everyone knows will be extreme and unpopular. This could mean more public sector layoffs, selling of national assets, higher taxes etc.
The irony is, there always seem to be two Jamaicas -- one that's real and one that's not. We read the papers almost daily, and see lavish VIP parties being hosted, with socialites and jet-setters out in large numbers wearing the finest couture & nibbling the finest array of gourmet delights. We see events on the North Coast promoting the finest luxury champagne, like Moet and Chandon, (retail price US$60 a bottle). Fine life and living is an art if you can adequately afford it, but flaunting wealth is not healthy, especially to those who cannot afford it. We seem to thrive on a culture of luxury which is very pretentious in many ways. The media should be more responsible in feeding into this also, especially in difficult times. When does a private house dinner party, for instance, become news, just because it's the epitome of luxury? This same excessive behaviour creates excessive demand on scarce US$ forcing up demand, forcing up its value relative to JA$. We import far more than we export, or what we can really afford. The excess carries through to the Government spending. In First World countries, personal wealth is hardly flaunted. No one cares really about personal wealth; it's trivial and you mostly see this type of news reported in gossip-type tabloids. Jamaica has some of the finest mansions and luxury cars in the entire Caribbean, yet it trails far behind most of its Caricom counterparts in terms of national development and per capita income. Some Caribbean countries like Trinidad, Bahamas and Barbados not only enjoy higher standards of living, but have as much as twice our GDP. Until our people can realise that we must balance out our culture of excess, capitalise on our assets and strengths, and live within our means, the problem could actually become catastrophic.
The irony is, there always seem to be two Jamaicas -- one that's real and one that's not. We read the papers almost daily, and see lavish VIP parties being hosted, with socialites and jet-setters out in large numbers wearing the finest couture & nibbling the finest array of gourmet delights. We see events on the North Coast promoting the finest luxury champagne, like Moet and Chandon, (retail price US$60 a bottle). Fine life and living is an art if you can adequately afford it, but flaunting wealth is not healthy, especially to those who cannot afford it. We seem to thrive on a culture of luxury which is very pretentious in many ways. The media should be more responsible in feeding into this also, especially in difficult times. When does a private house dinner party, for instance, become news, just because it's the epitome of luxury? This same excessive behaviour creates excessive demand on scarce US$ forcing up demand, forcing up its value relative to JA$. We import far more than we export, or what we can really afford. The excess carries through to the Government spending. In First World countries, personal wealth is hardly flaunted. No one cares really about personal wealth; it's trivial and you mostly see this type of news reported in gossip-type tabloids. Jamaica has some of the finest mansions and luxury cars in the entire Caribbean, yet it trails far behind most of its Caricom counterparts in terms of national development and per capita income. Some Caribbean countries like Trinidad, Bahamas and Barbados not only enjoy higher standards of living, but have as much as twice our GDP. Until our people can realise that we must balance out our culture of excess, capitalise on our assets and strengths, and live within our means, the problem could actually become catastrophic.
The Government must therefore present a vision, a strategic plan with definable goals and plans to help boost earnings, employment, investment, and cut spending. Tax collection needs to be enhanced to broaden the net. My advice to the PM is to come clean with the Jamaican public, and deal with the situation head-on. Honesty and transparency must be the basis going forward, to gain any form of confidence. This grandeur and illusion of accomplishments in year one is just that, a mere illusion.
P Chin
chin_p@yahoo.com
The reality of Jamaica's debt crisis
-->