Dear Editor,
In 1996 the Jamaican economy registered a negative one per cent growth rate when the debt-to-GDP ratio was only 81 per cent.
The argument that the debt is a drag on growth (GDP) is false, as the Jamaican experience from 1992 to 2008 reveals that when debt decreases, so does GDP.
The largest single factor distorting our macroeconomic policies is maintaining a floating dollar. Devaluation will make us poor. Constant devaluation of the Jamaican dollar drives up the rate of increases in the national debt and has absolutely no impact on growing the economy (GDP).
What the unstable dollar does is to create a speculative environment in the foreign exchange market which diverts investment capital from being channelled in manufacturing, energy and infrastructure, and, instead, into US-dollar purchases to make millions of dollars from the exchange rate spread.
Foreign currency speculation effectively sucks investment out of the economy, reducing the rate of growth, which in turn drives the devaluation of the Jamaican dollar, from which these investors make millions on the increased spread.
According to former Prime Minister Bruce Golding: “The current macroeconomic programme essentially is squeezing the economy in order to meet the primary surplus target... In order to get the revenues you need, you squeeze the life out of the economy. Then, if you’re squeezing the life out of the economy, where is the growth to come from in order for you to achieve targets?” Golding has criticised what he suggested was flawed economic theory promoted by the multilaterals.
To change this trajectory, the new Jamaica Labour Party Government must move swiftly on the exchange rate issues. The Jamaican dollar should be underwritten on the strength of its human capital, especially the Jamaican Diaspora, as the basis for adopting the US dollar as the currency of exchange in Jamaica.
Silbert Barrett
net_sbarrett@hotmail.com
In 1996 the Jamaican economy registered a negative one per cent growth rate when the debt-to-GDP ratio was only 81 per cent.
The argument that the debt is a drag on growth (GDP) is false, as the Jamaican experience from 1992 to 2008 reveals that when debt decreases, so does GDP.
The largest single factor distorting our macroeconomic policies is maintaining a floating dollar. Devaluation will make us poor. Constant devaluation of the Jamaican dollar drives up the rate of increases in the national debt and has absolutely no impact on growing the economy (GDP).
What the unstable dollar does is to create a speculative environment in the foreign exchange market which diverts investment capital from being channelled in manufacturing, energy and infrastructure, and, instead, into US-dollar purchases to make millions of dollars from the exchange rate spread.
Foreign currency speculation effectively sucks investment out of the economy, reducing the rate of growth, which in turn drives the devaluation of the Jamaican dollar, from which these investors make millions on the increased spread.
According to former Prime Minister Bruce Golding: “The current macroeconomic programme essentially is squeezing the economy in order to meet the primary surplus target... In order to get the revenues you need, you squeeze the life out of the economy. Then, if you’re squeezing the life out of the economy, where is the growth to come from in order for you to achieve targets?” Golding has criticised what he suggested was flawed economic theory promoted by the multilaterals.
To change this trajectory, the new Jamaica Labour Party Government must move swiftly on the exchange rate issues. The Jamaican dollar should be underwritten on the strength of its human capital, especially the Jamaican Diaspora, as the basis for adopting the US dollar as the currency of exchange in Jamaica.
Silbert Barrett
net_sbarrett@hotmail.com