Dennis Chung, ContributorONCE AGAIN we ended a calendar year, and it is good to reflect on what transpired so we can understand the progress made and plan for the future. There is no doubt that 2004 has been one of the most critical years in Jamaica's history for a number of reasons, namely, the fiscal accounts, economic growth, crime and education.
These four factors were the focal points over that period. The underlying concern being the desire to achieve and maintain economic growth and social progress. At no other time in Jamaica's history (as far as I can remember) was the entire country so consumed with the budget and economic numbers.
PERSONALITY OF THE YEAR
It is because of this that I think the year's personality must have been Dr. Omar Davies. The year 2004 was a roller coast ride for him as he went from possibly the most admired politician to the one that gives the greatest displeasure, and back again to a favourable personality. Irrespective of what is thought of him, however, I think in 2004 he did a very good job in maintaining fiscal targets in the face of much adversity. Past actions excused.
Dr. Peter Phillips provided some competition but Dr. Davies was the one who, in my opinion, attracted most attention and throughout it all stuck it out in achieving the objectives.
LEADING FINANCIAL INDICATORS
If we are truly to measure our progress in 2004, however, we must move away from personalities and partialities and examine the leading indicators that provide a measurement of the pulse of our progress. I have attempted to do this by comparison of what I consider to be key indicators in the table below.
The numbers show that since the start of 2004 we achieved improvements in the fiscal area, namely, Debt/GDP, fiscal balance and the current account deficit (worsened because of the impact of Hurricane Ivan).
The rate of exchange held fairly steady and the economic growth and inflation numbers were affected primarily by the passing of hurricanes Charlie and Ivan. If we experienced no natural disasters we would have enjoyed better economic fortunes, although we should always be in a mode to expect disruptions.
Despite the passing of the hurricanes, however, the numbers show that in 2004 we saw improvements in our economic fortunes. This was highlighted in the business confidence index, which showed improvement in 2004 over prior years and only dipped as a result of the hurricane. Even on the ground one can feel that there is a lot more confidence in the economy today than there was a year ago.
This is not to say that we should become complacent as we are still in a very fragile economic position where these financial indicators could change dramatically in a negative way, and so the fiscal reformation continues to be important.
INTEREST RATES
In my opinion, the factor of greatest consequence in resuscitating investments and boosting economic confidence was the decline in interest rates. At the start of 2004 the debates all focused on the level of interest rates. This was the single most talked about factor that was said to be retarding economic growth, as government was crowding out the market with its appetite for cash.
In December 2003 treasury bill rates were 19.86 per cent and by the end of March 2004 fell to 14.45 per cent, still higher than the international community, but was a welcome move. Today treasury bill rates have even inched down further. I think 2004 will be remembered as the year in which the seemingly permanent reduction in interest rates began with a promise by government to further reduce rates.
MURDER, EXTORTION AND THE MOU
There are, of course, non-financial factors that have caused great concern, of which the most important has been crime and in particular murders. In 2004 the level of crime consciousness escalated. We ended 2003 with just over 1,000 murders and 2004 with 1,445. For 2005 already we have killed over 70 persons.
In addition to crime, the issue of extortion has come to the fore more than ever. Extortion always existed but the business and crime fighting communities in 2004 spoke against it more than any other time in our history. This has come from two sources: (1) realisation of the link between extortion and business costs, which in turn affects international competitiveness; and (2) younger business persons coming on the scene. This is a fight we must win in 2005 else we will see communities such as Spanish Town being stripped of business activity.
Another monumental achievement was the Memorandum of Understanding (MoU), which has been in the pipeline for a while but only became reality in 2004. At the start of 2004 the business and political community recognised a need for common thinking and objectives. This was played out in the MoU, where trade unions, workers, private sector and the government reached a landmark agreement in an attempt to control costs. This was not necessarily the most efficient way but for political and social reasons had to be structured in this manner, and already at the start of 2005 this fragile relationship seemed threatened. The end result is that government has managed to control its wage bill on the road to meeting the fiscal targets.
In the same manner, much must be said about the buy and eat Jamaican campaigns, which were highly touted by the business community, which also realised the importance of product quality. Senator Norman Grant in particular was very instrumental in his leadership in the Eat Jamaican campaign.
EDUCATION
In 2004 it seems as if all the technocrats and politicians finally woke up to the fact that we do not have an education system. This came after much discussion about the fact that our labour force was ill-prepared for globalisation and in many cases unemployable.
HOPING FOR THE BEST
The task force has finally prepared its report and, hopefully, we will see some changes in 2005 (despite doubts re funding), but education certainly was an agenda item with most people recognising that our whole economic and social infrastructure is being negatively affected by the poor state of our education.
In summary, the year 2004 was dominated by economic and fiscal issues, where the country as a whole watched carefully the government's fiscal performance because of how critical it was going to be.
We started 2004 with a downgraded credit rating and ended up with it being improved. In the fiscal area we have certainly performed better than we did in previous years and, more importantly, for the first in a very long time it seems as if the government is committed to Jamaica's economic growth prospects, even if out of necessity.
In addition, many Jamaicans have made the important link between the social (non-quantitative) issues and the economy, as is evidenced by the numerous commentaries and talk show discussions. If nothing else, 2004 was indeed a year of enlightenment in this regard, which it is imperative we build on this year.
Email: dra_chung@hotmail.com
