JAMONOMICS

So i was doing some research and i came up on some studies that Capri has done on Jamaica's debt and realized some very interesting things. some of which a lot of people don't know, including my public sector teacher (who is from the states). Capri also ran some tests to test some scenarios to see the result if we were to choose certain paths to deal with the debt problem. I will outline what they were basically sating. One thing that i finally realized was that our central government spending is actually much less than our revenues. Much much less! Therefore the focus on Public Sector wages is somewhat misguided and quiet frankly a scapegoat in the whole situation.

First of all it was don't in October 2008, and as we know a LOT has changed since then, but i still think it is relevant in deciding what we should do. Indeed some of the recommendations may be even more urgent than ever.

Scenarios and outcomes:

1. Do nothing - if Jamaica was to do nothing our debt/GDP ratio will drop bellow 100 in 13 years and we get a balanced budget it 8 years.

2. If we borrow only from foreign rather than domestic sources (doubled foreign debt ratio) - balanced budget in 8 years.

3. If we only borrowed from multilateral at much cheaper interest rates - debt/GDP ratio equals in 12 years and reach balanced budget in 7 years

4. If we stopped absorbing debt from non-central gov organizations (Air J, JUTC, Sugar Companies etc.) - 10 years to debt/GDP ratio is equal, 6 years to balanced budget.

5. If we increased tax revenue by 3% - Debt/GDP ratio met in 9 years, and balanced budget in 4 years.

6. If we had constant 3% growth - balanced budget in four years.

So it see, the debt problem is solved not through stifling public sector wages, regardless of how inefficient they are, but rather through cutting off some unprofitable entities. More obviously we need economic growth, or increased revenues by at least 3% to bring the debt/GDP ratio below 100% in less than 10 years.

Capri presentation*