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7 Numbers every Jamaican should be concerned about but only a few really are.


The data below serves to highlight some critical numbers concerning the Jamaican economy.

 2.2% - Jamaica's GDP growth rate for 2011

7 - Jamaica's rank on IMF's data of the worlds slowest growing economies.

8.55% - Growth rate of Jamaica's Total Internal Debt for 2011

18.75% - Growth rate of Total Government Guaranteed External Debt between Mar 2010 - Feb 2011

JM$1,226.15 Billion - Jamaica's Gross Domestic Product

JM$1,713.29 Billion  - Total Government Gross Debt

50 - Number of years it took various political leaders to pile this burden and if this is allowed to increase the earlier six numbers will only get worse.

Why these numbers should matter:
  1. More Taxes: Debts must be repaid and the primary means for the government to pay these debts is through taxes. Jamaicans should brace for more and significant tax increases over the next five years  should national debt growth rates continue to out pace GDP growth and government tax inflows growth rates.
  2. Devaluation of the Jamaican dollar: The more debt Jamaica has the less attractive the currency looks especially if NIR is being used to pay debt. The more the dollar devalues the more expensive everything will become and technically leading to increased poverty.
  3. Higher interest rates: If Jamaica is viewed as being less capable of repaying its debts by international rating firms, Jamaica could be down graded. If this happens higher interest rates could follow and as a result to cost of money will go up.   if this happen and history repeats itself Jamaicans may brace for further economic contraction. 
  4. Lack of national financial resources to spend on public sector wages and national infrastructure: if there is no funds to finance public sector wages then one of or two things could happen. Public sector workforce is cut or a salary freeze is imposed for the next 3-5 years.

Possible options (solutions suggestions) for the country:
  • Jamaicans start to consume significantly less imports (food and fuel) and shift much more of our efforts into export of all legal kinds.
  • All public sector workers agree immediately to a sacrifice of a public sector wage freeze for the next two-three years wage freeze without retroactive payment for two years.
  • Debt forgiveness or a partial default on the national debt which is quickly reaching a crescendo at which point the country will default.

Greater belt tightening is a must in the near future if the debt growth rates don't stabilize or begin to fall. Jamaicans can choose  to tighten this belt voluntarily now or be forced to do so in the near future 3-5 years as a consequence of the uncontrolled and unmanageable debt levels.

The question I have to ask myself is, is this real or is this a consequence of an overly worried and misinformed mind?


Comments

  1. O2July 24, 2012 at 7:28 AM

    political leaders need a wage cut to below when they gave themselves an increase. we shouldn't have a big jamaica 50 celebration. Tax heavily imported goods to slow imports of products we produce ourselves.

    ReplyDelete

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