One of JAMAICA’s daily publications today blared out the headline; “Poverty Will Worsen.” The article then laid out the data that supports its assertion; the central bank raised interest rates by a full percentage point from 0.5 percent to 1.5 percent.
The business community argues the rate increase will make it difficult for business people to secure and manage loan payments in an already difficult economic climate.
The Bank of Jamaica, on the other hand, insists its decision is “aimed at ensuring that the annual increase in the prices of consumer goods and services remains within the bank’s inflation target of 4.0 percent to 6.0 percent”.
As is customary, you may well imagine that the truth lies somewhere in the middle.
One does not need to be an economist to understand that the nation’s economy is not supported by any real and tangible performance in manufacturing, bauxite, agriculture, or any other export-based performance index.
Jamaica’seconomy is anchored to tourism; as we all know, tourism is subject to all kinds of exposures that dictate whether people travel or not. Even at its best, no single sector is nearly enough to support an economy with nearly three million dependents.
And so remittance becomes the second highest foreign exchange source of revenue streaming into the Island, — again a very fickle revenue stream subject to economic and other conditions in the source countries.
This is where foreign lenders come in. So the economy stumbles along year over year, largely existing on borrowed money, being subjected to the dictates of lender agencies whose interests lie in keeping the country forever a debtor state dependent on them for survival. This means that each year a larger share of the Island’s gross domestic product goes to debt servicing or interest payments, depending on your preference.
Therefore, our Jamaican economy is operating like a shopkeeper who opens a little grocery shop in an area where no one lives, gets up every day, and leans on the counter expecting business to come through the door.
The number one issue affecting Jamaica is “crime.” It has been this way since the ’70s. It will continue to be this way until a crop of leaders emerge who understand that when they support lax laws that enhance criminality rather than eliminate it, they are themselves subject to the negative consequences of crime.
‘Poverty will worsen,’ but not because of a single point increase in interest rates by the central bank; it will increase because the leaders of the nation are trying to stand up a nation of supposed prosperity that is not sustained and cemented on the strong pillars of the rule of law.
Because the economy encourages profiteering and graft, it discourages innovation, foreign investment, and the return of Jamaican residents living in the diaspora.
The money spent on law enforcement is calculable; the money lost to the nation because of the violent crime rate is incalculable. Added together, the nation continues to bleed resources that could have been better spent in improving the lives of the Jamaican people.
Instead of strong leadership, Jamaica flounders along like a ship without a rudder, subject to the directions of the wind.
The poverty that continues to strangle Jamaicans has little to do with the single point rate increase and everything to do with the people and their leaders’ love affair with corruption and violent crime.
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Mike Beckles is a former Police Detective, businessman, freelance writer, black achiever honoree, and creator of the blog mikebeckles.com.