If it wasn't clearer before its now clear as day, Jamaicans must now look to earning foreign exchange in an effort to survive in a very challenging economic environment.
The Jamaican dollar relative to the US Dollar at the time of writing the article was US$1:JM$109.49. The revelation while not new to most has been recently underscored by the fact that exchange rate is bearing down on yet another key psychological level.
Using data compiled from the bank of Jamaica's website, had I been earning US$1,000.00 per month as of January 1, 2012 I would have been getting JM$86,750.00 as my monthly salary. Today assuming I had not gotten an increase in salary I would have been earning JM$109,490.00 today (Friday, March 21, 2014).
Another way to look at this is that had I been earning JM$86,750.00 per month back January 1, 2012 and my salary had not increased, what I could afford to buy now would be only what JM$73,082.15 could get me back then. Hence, its as if I am only being paid JM$73,082.15 now representing an income devaluation of approximately 15.76%. Income devaluations was calculated based on the monthly Consumer Price Index (CPI) data from January 2012 to February 2014 from the Statistical Institute of Jamaica (STATIN Jamaica). Now considering the Jamaican dollar has devalued 26.21% over the same period and the Fuel and IPP component of the Jamaica Public Service electricity bills has experience an inflation of 36.5% which is closely correlated to fuel and gas prices at the pump it's not hard to imagine that my income now having not changed since January 2012 could actually only be worth JM$55,086.25.
This highlights a very significant issue every Jamaican can confront. It's only entirely true for those who have not gotten that salary increase over the last two year to keep pace with the devaluation of the dollar and local inflation.
Quick Look at A Few Implications
Exchange Rate, Earnings & Spending Power: So it should be clear the obvious major implication of the aforementioned information is income devaluation. While there are real pros for this an important highlight of this is the spending power which decreases considering collectively as a nation all real incomes would have either devalued or only very slightly ticked up. This could result in reduced incomes for the government thought taxes as there is less spending and this in turn result in less spending on its part to provide services to the nation. The vicious negative socio-economic cycle will continue.
Exchange Rate & Savings: Smartly many young Jamaicans continue to leave the country in droves as savings also experience devaluation as few savings accounts offer interest rates that compensate for local inflation rate. this makes me wonder if Jamaica was designed and is being operated as a talent exporter.
Exchange Rate & National Indebtedness: The country's debt continues to climb as noted in the article "Debt Exchange Rate and Growth" written by Dr. Andre Haughton and published in the Jamaica Gleaner on March 5, 2014. As the exchange rate climbs so does the national debt denominated in US dollars. This leads to indebtedness of the people. The people have to pay back the debt. The people have to suffer the poor infrastructure conditions and services delivered by government and more debt will only results in less capabilities of the
If combined all this is not enough to drive a focus on Foreign Exchange Earnings I am not sure what is.
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