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As I indicated at the beginning, this budget has been unique in the sense that there have been no surprises. Changes which have been made in the Budget process, have implied that there has been a greater disclosure of information in advance, than ever before. The extent to which debt servicing, particularly domestic debt servicing, has dominated the expenditure budget, is the extent to which other areas have been denied resources which are clearly needed. There is a clear message for the population, in that, it demonstrates that given the size of the pie, if there is a bigger allocation to one area, the logical implication is that other sectors must make do with less. In this specific instance, the decision taken to protect all depositors, all holders of insurance policies, as well as pension funds, was not costless. For a period, whilst confidence was being restored to the sector, it was possible to delay full accounting. However, the time has now come for full responsibility of the debt to be taken on board by the Ministry of Finance through the Budget. Even whilst we accept that there are significant needs to be addressed elsewhere, it is important that it be recognized by all members here, by the media, and more importantly, by the country at large, that it is simply not possible to respond to all demands when their total costs exceed the level of resources available. Furthermore, the country must recognize that there is no benevolent foreign government waiting to respond to our demand for additional resources. Whilst it is obviously the primary responsibility of the Administration to lay the facts on the table, and in that sense, primarily my responsibility as the person leading off the budget debate, representatives of the media, and those who see themselves as opinion makers, must assume part of the responsibility for stating the case.
I feel it is necessary once again to return to the issue of maintaining policies which have credibility, not just amongst domestic creditors and domestic population, but increasingly externally. I must also indicate that this external credibility is not only with respect to multilateral or bilateral partners, but to private holders of money. For that reason let me return once again to the publication, the Bear Sovereign, and its assessment of Jamaica. I have already made reference to the two risk factors highlighted. Let me now speak to the positive factors which would influence these private sector lenders to lend money to Jamaica. The publication lists six such factors. The first one, is that the medium term economic programme endorsed by the IMF as a Staff Monitored Programme (SMP), has strengthened the credibility of an economic policy effort. Reference is also made to the Article 4 consultations which once again supported our macro economic efforts. The second commendation is given to stable macro economic performance. The publication highlights many of the results to which I have already spoken. The third positive, is the performance of Tourism. Again it is an outcome to which I have already made reference. The fourth, is the fiscal performance. Again, whilst the adjustments have been difficult, creditors need to be assured that you intend to repay loans advanced. The fifth positive, is the fact that despite the high overall debt ratio, those related to the country's external debt are moderate. The publication points out that Jamaica's external debt to export ratio is 85% compared to Peru's 305%, Columbia 202%, Argentina 487% and Brazil 340%. Hence, with a liberalized foreign exchange system, adequate NIR and stable export earnings, there is no question about difficulties in finding foreign exchange to meet debt payments. The sixth positive, is the banking system reform. The report hails the recovery in the sector and notes that "the financial sector as a whole is on the rebound". Positive mention is also made of the legislation advances and the institutional strengthening which have taken place. In summary, therefore, is that the external assessment points to six positive indicators why Jamaica is a good credit risk.
Madam Speaker, we on this side have not tried to hide the facts of our socio-economic situation. We face enormous difficulties - but what's new. Despite the difficulties, there have been significant achievements at both the macro-economic and sectoral levels during the last fiscal years and the fact is, we have been through the worst. During last year, we weathered a 50% increase in oil prices, a severe drought, and yet we contained inflation - as per target. We faced difficulties in the foreign exchange market and took the necessary measures, backed by a record NIR to correct the problem. Interest rates reduction suffered a setback for a two-month period but this has been rectified and at the end of the year, we are only slightly off our original target. We set out to access (US) $300 million from the multilaterals, with the backing of the IMF and we actually received a commitment of (US)$325 million. We set out to tap the international capital markets and this we did on two occasions without the need to go on a roadshow. We said we would sell Union bank and we did. Despite the budgetary restrictions, we directed needed resources to the water and sewerage sectors, to road repairs and to education. Yet we managed to exceed our fiscal targets without a major tax package. We have not only presented a credible Budget but one without any new taxes. Madam Speaker, whilst problems remain, the indicators are pointing in the right direction. Growth has resumed and all signs in the major sectors are positive. Promises are easily made by those who specialize in populism. We ask to be judged in terms of actions versus commitment. || Previous | Table of Contents ||
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