Dear Editor,

While Dr Omar Davies on Tuesday made an excellent critique of the shortcomings of the Audley Shaw budget, he presented no alternative way forward, no longer-term plan for growth and development, no larger macro-economic policy.

In a follow-up television broadcast, Professor Rosalea Hamilton from UTech gave him zero for this aspect of his presentation. She did likewise the week before as regards Audley Shaw’s presentation.

The problem is that there is no alternative other than to address the debt trap more radically. Omar Davies says quite correctly that not only can most Jamaicans not afford any more taxes and fare increases, but that the revenue intake is likely to be much below predictions. We heard last night that consumer and business confidence is at an almost record low, meaning less consumption and investment spending – thus a sluggish economy and lower tax intakes.

Dr Davies would also argue that there is no room for further real-value cuts in spending on most government services, especially health and education. So the only “answer” is to take the debt exchange a step further. Reduce those still-high interest rates even further (making allowance perhaps for pensioners who hold less than 10 per cent of local government debt). And extend the reduction in returns to the external debt too. This is exactly what the IMF is there to prevent, as the Letter of Intent spells out, also forbidding any exchange or trade controls. A moratorium of the debt is fully justified, given our serious economic and social situation.

Why are the teachers, nurses and police and now the students being told there is no money, when those who are fortunate enough to have spare money to “invest” in government paper do not face the same treatment? Of course, it was Dr Davies in 2002 who said on the evening news, “The people of Jamaica deserve better, but more important, our creditors deserve better.”

For those who say it can’t work because we could then not borrow again, look at the primary surplus. Leaving debt out of the equation, the government collects more in taxes than it spends on services. A moratorium on the debt can work, and the debt exchange had proven that the constitution is really no impediment.

Paul Ward

pgward@cwjamaica.com