Hic opus, hic labor
This is where the tar hits the road.
MINISTER OF FINANCE cannot be unaware that calling on the Central Bank for assistance in meeting the debt requirements of the Government when the engines of growth are stalled has to be an unwise policy. But what else can he do if creditors are knocking at the door? It is desperation, but the good citizens, especially the old ones who cannot now hustle, are in a similar position. That is why people are not paying Value Added Taxes or Pay As You Earn collected. It’s like saying, “We killed a man because our life was threatened” (taxes).
Alternatively, the Central Bank graciously acceding to these approaches does not pay cognizance as the defender of the people. How then can the minister be reputed to say that it was “puzzling why there was steep decline on our international reserves”? Can he be hinting that foreign exchange is being exported or not imported “in an abnormal fashion”? Can it be that he does not see the connection between the increase in the limit for Treasuries that the Government has recently legalized?
The Budget mainly skirted the main issue, that is, that Government has been trapped by its own rhetoric since 2007. “There will be no layoffs of public servants.” Sir Lloyd did serious layoffs and salary cuts. Minister Sinclair only did petty salary cuts and instituted a regime of rationalization (layoffs) and non-hiring, but surreptitiously. He scotched the cobra, not killed it. A zebra by a different stripe is still a zebra.
A friend of mine called me from Shanghai to say, “Lell yo min’sta dat banks hav hu’ded an’ one diffunt way to skin a cat, so dat wen taxasun incres on asset, bank incres fee.”
I agreed with him as we the citizens pay the cost and the decrease is felt in our pockets with a consequent decrease in Value Added Tax. It is a vicious circle in which the minister is trapped, and I say without any fear of contradiction that you cannot outsmart the banks. When they find that they cannot outsmart you, they pack up and leave, as happened in recent years. Or not lend.
I agree with some of the concessions made to the tourism sector, which, given time and a rationalization in room rates, may help. But even more help is needed as most restaurants and hotels are labouring under a “woogle” of debt that need some monetary intervention from banks. Unlikely! We need to be careful that countries apparently coming out of recession may not be doing business as they did before. That is why the international business sector must be more proactive in ferreting out new business, now given new orders with which to act.
It is said that the duty of the opposition is to oppose. Maybe its concentration on opposing did not sit well with the electorate in March. Nothing really came from them in the incomplete Budget, only opposing. So the cupboard so far in apparently bare! Except that the honorable minister who spoke so eloquently and chastised that no suggestions have been forthcoming may have been deaf since 2012.
Older folks, like the Wild Coot, can see nothing in the Budget, neither can the youth, and for that matter the CLICO hopefuls, or Mr Barrack, or Sir Hillary. Only more pain and sorrow. So they have to say “Et tu yuh brute”.
While the expectant frontloading of the economic activities has been touted in the Budget, this activity is scheduled to be stretched over 19 months during which the foreign exchange position is in fourth gear accelerating downhill at 200 million dollars per quarter. Some mischievous body is spreading the rumour that the borrowing rate for junk bonds is14 per cent. It got to be a Jamaican.
Old hacks like Four Seasons, the Pierhead, Almond etc. are a wait-and-see hopeful.
People are advising the beleaguered minister to seek counsel from the past Prime Minister. This will involve a trip to the underworld and not first class. If he consults the oracle at Delphi he might just get useful advice. He might be told that gaining entrance is not so difficult so long as he get the golden bough; but coming back out to face the next 19 months, hic opus est. (Publius Virgilius Maro Aeneid book 8.)
• Harry Russell is a banker. Email [email protected]