IN ANNOUNCING the latest one percentage point cut in its benchmark rates last week, Jamaica’s central bank said it could take the action because of the slowdown in inflation and the relative stability in the foreign-exchange market following the volatility late last year and in the early months of 2009.
A glad dat BOJ feel dat it cyan use de word stable fi describe henyting fi do wid de Jamaican economy. De only ting dat is stable is de mount af suffering dat lick wi due to de high interest rate policy of de last decade. Furder more; tell mi is what a 1% decrease really going do when de interest rates so high aready. A don’t know why BOJ tink dem su smart das everybody in de world a lower dem interest rate to almost zero fi stimulate dem economy and BOJ still ave fi dem own at close to 20%. Yuh know what a tink wi should cut in dis country fi stimulate de economy? De amount of politician per square mile. Wi ave Parliamentarians, Senators, Cabinet, Councilors, Governa General and all dem good fo is fi cut ribbons. Why wi need so much a dem fi jus one likkle island?
Jamaicans have every cause to be glad for these developments and to hope they continue and even accelerate. For, as politicians like to remind us, inflation is a tax primarily against the poor who lack the resources to hedge against and take advantage of rising prices.
Since politicians know su much bout poor people wi should ask dem is how com dem cyant do nothing fi help poor people out a poverty? Dem expect dat de likkle interest rate cut wey dem announce going to send us into a carnival-like street party. I ave been listening to de Politicians talk fi su many years dat de ongly ting dat mek mi jump up is when dere Parliament broadcast get cut off cause is time fi see Usain Bolt run.
Moreover, the four-and-a-half percentage point reduction in the rate on the Bank of Jamaica’s (BOJ) 180-day certificate of deposit should be good for business
, assuming that it translates, as it should, into lower costs from which firms can borrow from their banks.
To assume dat when BOJ ave a rate cut, de bank dem wi follow so dat de likkle man pan de street cyan get some money fi build up im business is jus as good as assuming dat because wi pay property tax in JA we are entitled to pot-hole free roads. It is like assuming when wi vote in a national election dat owa vote count and wi woudn’t affi spend su much a millions a dollars fi ave whole ep a by-elections.
There are direct benefits for the Government too. Lower interest rates mean that it will pay less on its over $600 billion in domestic debt and will, therefore, be in a stronger position to shore up its badly unbalanced fiscal accounts.
Mi want fi know is what wi get fi dat $600 billion worth a debt? Nothing bout gunman, stray dawg and madman. Or; were we using dat money ova de years to buy de politician’s cris new cyar and dem so-called “business trips abroad.”
The question, though, is whether the potential benefits will be fully realised.
What BOJ’s Governor Derick Latibeaudiere didn’t say when the bank announced last week’s rate cuts is that a significant part of the emerging market and macroeconomic stability to which he alluded has to do with assumptions being made by financial markets about Jamaica’s relations with the International Monetary Fund (IMF).
Tell mi is what de IMF going tink when dem com Jamaica and see sey everybody deh pon stike, even de likkle barefoot bwoy dem wey wipe yuh cyar window at de stoplight. Ow are dey going to view us when dem fine out dat our Minista of Sports spen half a million dollas fi go Olympics but wi cyannot even fine likkle money fi pay owa teachas and nurses.
But the most important issue regarding the IMF is, for now, psychological. It is well known that Jamaica is negotiating with the fund for US$1.2 billion in credit that will bring with it an IMF-sanctioned programme for the medium-term management of the island’s economy.
Yuh tink dat wid dat loan dat wi getting fram de IMF wi cyan also borrow some politicians cause it don’t seem like de ones we ave know anyting bout management.
The fund’s imprimatur will be important for accessing additional credit from the World Bank and the Inter-American Development Bank. The expectation of the IMF agreement has shored up market confidence – domestic and foreign – in Jamaica.
Yuh know what will give mi confidence in de Jamaican leadership? When dem cyan tell me how dem allow Butch Stewart fi use Air Jamaica as im personal taxi service to Sandals and den sell it back to de Gvt wid more debt dan im buy it wid. Or when dem cyan tell mi why wi cyant mek a profit off a sugar and banana afta de Colonialists dem mek money afa it fi more dan a century worth of slavery.
It is important, therefore, that the Government concludes its negotiations with the fund, so that all uncertainties are cleared and the country can get about and concentrate on the necessary but unavoidably tough business of rebuilding the economy. As it stands now, however, an October time frame for having in place an agreement with the fund seems doubtful.
The Government will only this week table its revised Budget for the current fiscal year and there is reported unease by IMF technocrats with some of the draft proposals put before them by the Jamaican authorities. In this environment, it is important that the Government get things right – and quickly.
Anybody wid common sense would be uneasy wid the Gvt’s proposals. Mi still a wait fi a plan to see how wi going invest inna owa own people to produce good & services instead of being so dependent pan de likkle tourists dem and remittances from abroad. Yuh nuh see sey de tourist dem now ave brok-pocket and de likkle yardies dem abroad a struggle. Look pan de mount a land and good people wi ave in Jamaica, Gvt nuh mus cyan put a plan togeda fi produce somping wi cyan export. Do, beg yuh nuh.
About the author
Ray Damdar is a Jamaican living abroad in Hartford, CT amongst on of de largest Jamaican populations in Merica. He is constantly amused by his culture has no odda choice but to comment.
Favorite saying “ When Eskimo ave money im buy fridge”
Article Excerpts in non-bold taken from The Jamaican Observer ‘ Striking a deal with the IMF is important.’ September 21, 2009.
-Photos & Commentry in bold courtesy of Ray Damdar & Guinep Tree Productions-