Government Squandering Mandate, economic situation worsens, tremendous credibility challenge- Tufton


Dr. Peter Phillips

Dr. Chris Tufton

Too little response to economic uncertainty

The Planning Institute of Jamaica (PIOJ), in its quarterly report, paints a worrying picture for the Jamaican economy based on data collected for April to June 2012 and predictions for the next three months ending September. With a projected growth of 0.1 per cent and predictions for the next quarter being anywhere from negative 0.5 to 0.5 per cent, the country’s economic planning agency is telecasting to Jamaicans and the world, that the signs are gloomy going forward.

The situation, PIOJ head Dr Gladstone Hutchinson said, could get worse with the challenges in the global economy. Global demand for our goods and services, such as tourism and bauxite con-tinue to show weaknesses, and our usual foreign-supply sources of commodities like corn and wheat are projected to see increased prices from the uncertainties surrounding output, caused from drought conditions.

With unemployment on the rise at 14.3 per cent, the highest since 1995 – according to the PIOJ head, and a slowdown in short-term job-creating sectors like construction, the Government will be hard-pressed to offer solace to a labour force whose jubilation and pride from the Jamaica 50 celebrations and outstanding performances of our athletes in London will soon give way to the call for food on their tables and back-to-school supplies for their children.

As deserving as the hype around Jamaica 50 and the Olympics was, this is likely to be a short-lived feel-good factor.

As the country’s economic situation worsens, the Government faces a tremendous credibility challenge, coming so soon after the many promises made after general and local government elections. The ‘ting tun up!’ is a popular phrase now used by Jamaicans, not in the way the People’s National Party (PNP) election campaign intended it, but a sign of increasing hard times.

Make no doubt about it: the PNP faced a daunting task when it received a political mandate on December 29, 2011 to continue to manage a stable but still fragile economy, debt that spanned generations and successive administrations, and an International Monetary Fund (IMF) deal that linked its continued support on critical but also politically unpopular reforms.

But even with a mandate for change, many Jamaicans could not have anticipated that all would be well because of a change of government. No one should have expected, contrary to the political utterances of the PNP during the campaign, that the IMF would change course.

And so it would be reasonable to expect that the Government would be much clearer in its intent at advancing an economic vision and be more decisive and transparent in its economic management strategy.

The single most significant challenge facing the Jamaican economy today is uncertainty, especially surrounding the management of the country’s economy. Uncertainty has encouraged speculation, which has already started to affect the economic stability of the country. The word on the street currently is, for those who can, to convert and hold US dollars as a hedge against the risks associated with the perceived crisis in the economy. This is a clear sign that confidence is eroding and the Government needs to move decisively to cauterise this trend.


To be fair, Jamaica is not the only country facing an economic confidence issue at this time. Just this past week, the World Economic Forum published the results of a 1,200-respondent survey of private- and public-sector experts which paints a grim outlook for the global economy over the next 12 months.

According to the report, the global economic confidence index has plummeted to a five-year low when these surveys began, where 72 per cent of respondents polled said they were not optimistic on the state of the global economy over the next 12 months. Slower-than-expected growth in the United States and China, as well as the Eurozone crisis, has contributed to this pessimistic outlook.

One cannot separate what happens here in the Jamaican economy from what happens elsewhere in the world. What happens elsewhere, particularly with our main trading partners in North America and Europe, will have implications for us. If they stop buying, we can’t earn from selling. If the foreigner loses his job, he won’t vacation in exotic places like Jamaica, and we won’t earn badly needed foreign exchange.


When the Golding administration took office in late 2007, it had to confront, almost immediately, a series of external economic shocks that saw a near US$1.5-billion fallout in revenues. The bauxite and alumina sector, for example, was hit hard by a fall in demand for manufacturers of cars and other metal products, as consumers in major markets either lost their jobs or were reluctant to spend.

The Jamaican Government then had the tough choices of allowing public-sector wages to go unpaid or hospitals to be shut down or find ways to finance its debt and routine government operations. Debt exchange and the IMF were the consequences of that crisis.

Former Prime Minister P.J. Patterson recently argued, as carried in the Observer newspaper, that the Golding administration acted too slowly in responding to the crisis back in 2008 and, hence, created a bigger economic challenge for the delay. Through hindsight, Mr Patterson’s analysis could be extended to the world, where hardly any country was spared that meltdown. Hindsight is 20/20 vision, they say, and now that those events are behind us, P.J. is clearly seeing through perfect lenses.

Perhaps the former prime minister and now elder statesman should apply some of his wisdom of experience to encourage the current administration to act with a greater sense of urgency to deal with what can now not be considered sudden and unexpected economic turbulence.

For one would have to be totally out of touch not to see what is coming and what we have to deal with as a country and people: high commodity prices, a slowdown in global demand, and closer to home, a debt burden that is stifling and an IMF agreement that will be heavily dependent on specific conditionalities related to structural reforms.

Head in the sand

Not to be decisive on these issues would be to deliberately squander the PNP Government’s mandate and political capital by almost pretending that these issues either don’t exist or are not urgent.

This Government is making an even more critical mistake than the Jamaica Labour Party (JLP) administration did during its last term in office. While the JLP took the tough decisions on debt exchange, we were not as fast in pushing through investment projects for greater job creation or communicating effectively with the Jamaican people the reasons for decisions like the choice between public-sector wage freeze and job losses.

Today, the PNP is doing worse. It seems at conflict with itself on these critical issues and, in the process, are sending mixed and uncertain signals to the country, creating an environment for panic and speculators.

One would have reasonably expected that the Government would use its first year in office to push through these critical reforms and wager a bet on seeing improvements to face the electorate in five years’ time, given that the political cycle, rather than the development cycle, is normally what drives political decisions in this country.

One could reasonably argue that the last JLP government called a general election just over four years of its five-year term in office knowing that there were tough decisions to be made, that could see political fallout, and would require a renewed mandate to complete. The signs were all around and the process of reform, including public-sector, pension and tax reform, had started. Within the JLP there was recognition that implementation would be challenging, but it had to be done. The change in administration has slowed the pace significantly, a mistake by the current administration.

More open communication

Going forward, the Government needs to speak more to the people, on what its intentions are for the economy and over what period of time the various proposed reforms will take place and what the likely implications will be.

The Government needs to tell the people how it will contend with the impact of the global economic slowdown, including the likely increase in basic food items and how it intends to address a more aggressive economic build-out for job-creating purposes.

Just last week, Peter Phillips, the minister of finance, at a Gleaner Editors Forum, confirmed his intention to conclude an IMF agreement by next month and the need to cut the public sector by more than 3,000 places this year. This is a timely move by the minister, and perhaps an indication that he is ready to be bold. Only time will tell.

Isn’t it ironic that as fate would have it, December 29 and a portfolio assignment has ensured that Peter, if he is to do the right thing, is the doctor to administer the “bitter medicine”?

Dr Chris Tufton is a senator, opposition spokesman on foreign affairs and trade, and investments, and co-executive director of CaPRI. The views in this column do not necessarily represent those of the above-mentioned entities. Email feedback to and

Going forward, the Government needs to speak more to the people on what its intentions are for the economy … .


1 Comment

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One response to “Government Squandering Mandate, economic situation worsens, tremendous credibility challenge- Tufton

  1. Brian

    What’s new?…….the economy has been going downhill at least since I left Jamaica in the mid 80s. If the powers that be that are running the Country wanted economic growth they would have not been destroying the local economy, by bring in cheap genetic imports of foods into the Country that also ruin people’s health on top of that. They speak out side of both sides of their mouth but their actions betray them.

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