It is good that neither Prime Minister Golding nor Finance Minister Shaw feels it worthwhile to attack Moody’s over its downgrade of Jamaica’s sovereign debt by two rungs to Caa1. That would be just a case of shooting the messenger, as was the case a fortnight ago when Standard and Poor’s (S&P) was lambasted for lowering its rating of Jamaica one slot to CCC, with a negative outlook.
The truth is, Jamaica is in dire economic straits without any clearly articulated prescriptions for extricating itself from the mess. And the Government carries, on the face of it, an unsustainable debt burden of nearly $1.3 trillion.
What S&P and now Moody’s have done is to alert Jamaica’s lenders to the possibility that, despite the country’s proud history of paying its debt and the strong commitment of the Government to continue doing so, some of their money could be at risk. As unpalatable as that message may be to us, it is a clearly reasonable action on the part of the rating agencies.
Three per cent decline
Indeed, coincidental with Moody’s report was an announcement by the Planning Institute of Jamaica that the economy declined by over three per cent in the third quarter, staying on course for a contraction by up to four per cent this fiscal year. The alumina sector has all but collapsed and remittances are down by around 15 per cent. Tourism, the third significant earner of foreign exchange, is up marginally, but not sufficient to cushion the fallout elsewhere. Moreover, as Moody’s cited, the Government, which is having serious trouble holding the fiscal deficit to the revised 8.5 per cent of GDP, has not yet completed negotiations with the International Monetary Fund for US$1.2 billion in loans.
The situation seems rather uncertain. Hard economic times demand tough action and, we would suggest, bold initiatives. It is into this new direction that we hope Prime Minister Golding is about to head and why there is no angry response to Moody’s latest rating.
Should we be right, we expect to see first an articulation of the new and revised strategies at this weekend’s annual conference of the governing Jamaica Labour Party, and certainly when Prime Minister Golding addresses the public session on Sunday.
Mr Golding, in that regard, will be clear that he cannot presume that he is talking to the party faithful; that speech has to be about mobilising all Jamaica for the difficulties ahead. He must declare his intent to behave as though he is only now just starting out in government and that he has three years to complete the task – and that is all the time he will ever have. In other words, he will be bold, doing what he knows to be right and necessary, whatever the political consequences.
The prime minister must then gather all stakeholders, including the domestics holders of the country’s bonds, for a frank discourse on the sacrifices expected from all to lift the country out of the quagmire. As part of this process, we suggest that Mr Golding gather a ‘council of wise persons’, whatever their political persuasion and representing the best possible talent, to help in the formulation and aggressive implementation of necessary and agreed policies.
The times call for extraordinary leadership, which we hope Mr Golding can deliver.