The Real Meaning of $100 to $1

The Markets have been on edge, investors are getting worried, The People are getting agitated and everyone is now waiting to hear the evitable news, The Jamaican Dollar has officially reached the benchmark 0.01 US$  i.e. not long from now (may very well be today) it will take $100JMD to buy a US dollar and the Canadian dollar is not lagging far behind  either, now the big question on everybody’s lips is with both currencies (but especially the greenback) about to hit the roof with record breaking levels what will it mean for the future of our economy? . Most naturally see this scenario as a picture of gloom and hopeless considering that these countries are our major trading partners, which would mean the cost of import would naturally skyrocket and cause a host of other problems not the least of with is rapid scale inflation on everything.

                    

Others however are still trying to be optimistic  presenting a scenario as an opportunity to grow rather than shrink in a period of deep austerity and great crisis, in a forum hosted by the Caribbean Policy Research Institute earlier this week,  it was heavily debated between the a group of financial experts and private sector leaders, whether or not the devaluation of the dollar was an advantage or will it be to the nation’s detriment, one such panelist was of the view that the devaluation can be useful as this would make our exports more marketable using the Keynesian model of maket equilibrium he argued that if we increase exports decrease imports and hold all other factors at a steady rate then currency devaluation may be seen as an oppurtunity to grow, the only problem with that logic however is that while it sounds good, Jamaica exports far more than it imports, in fact data from the EXIM Bank shows that 95% of all Jamaican exports is based on a mere 6 products, the question one can ask here is are we really in a position to take advantage of this change in market value?". Of course the issue of import substitution was also brought forward, while it is a noble suggestion which I absolutely embrace, the question still remains how feasible is it to carry out the process and in what timeframe?.  

According to the latest Ease of Doing Business Report that is published by the World Bank, Jamaica ranks 90^th of all countries in the world, it’s no wonder that many investors (even Jamaican ones) are choosing to place their money elsewhere as it is quite clear that there is not much of a business friendly environment and the risks are far too great. The simple fact of the matter is that Austerity Measures are short term, what this country really needs is structural adjustments to transform the way we do business , anything short of that will result in failure.

                                             

Of course when Talking Structural Adjustment Programmes, who better to consult than the International Monetary Fund, a multilateral lending agency that  countries would rather avoid yet so many of them end up doing business with anyway, who could forget the promises made by Prime Minister Portia Simpson Miller who during her bid for Prime Minister in the 2011 promised to have an IMF deal on the table within two weeks after winning the elections, but now it’s over a year and still no deal, in fact after months of waiting for a response, the Jamaican public is now hear that the IMF is just beginning to look at the Government’s proposal, clearly the government has no clue what it is doing, in fact it’s proposed national debt exchange which was supposed to reap success turn out instead  to be an utter failure on part of the government and investors lost millions, one bank records as much as $2.5 Billion JMD in losses purely as result of the debt exchange,how can  anyone even consider that  this government is competent enough to manage the economy when they can't even get the debt exchange right, the Bruce Golding Government  had also tried a debt exchange, the difference however is that they were successful where Simpson Miller and most especially her Finance Minister Peter Philips has failed .

               

As I have reiterated before the Simpson-Miller government has demonstrated its incompetence, time and time again, it has ruined our economy, thousands are workers are laid off lowering productivity, investors are being scared away by their anti-capitalist policies and overly bureaucratic regulations, inflation is going haywire and now the dollar is nearing the dreaded mark to equal both $100USD and $100CDN (it could very well be happening now as I write), with the Government set to open the budget debate in parliament next week the Philips has promised no new taxes, but I’m not holding my breath for their promises to materialise, it wouldn’t be the first time that these self-serving politicians have lied to the country before and it certainly won’t be the last.