The Jamaica Labour Party Government has just presented its annual budget, leaving many citizens complaining about excessive tax increases. In a budget of J$555.7B (US$1=J$88.7), the Minister of Finance projected $18B in taxes, with further increases in petrol prices, and new General Consumption Taxes (the equivalent of a VAT) on computers and books if not used for educational purposes. The increases in taxation are not really a surprise to the population as, for the last few months, there has been much speculation about how the government could close a substantial projected financing gap.

The resistance of the Jamaican economy to substantial recovery over the years since the late 1970s has been one of the surprises in the record of economic development efforts in Caricom, after a vibrant start in the mid-sixties. This has led to a persistent pessimism about the country’s economic prospects for much of the period since – pessimism recently repeated in one of the country’s leading newspapers, the Jamaica Gleaner (May 1), which observed: “truth to be told, there are no quick or easy fixes to the problems of the Jamaican economy, which is expected to decline by as much as three percent this fiscal year…And even when the global recession lifts Jamaica will hardly be out of the woods – not with fiscal deficits of seven percent of the GDP; a national debt of nearly 130 percent of the value of all goods and services produced annually; a private sector whose entrepreneurial will is undermined by a gourmandizing state; and a crime problem that frightens productivity. Moreover, whatever the future holds, in the short term, there remains a crisis to be dealt with if Jamaica, in the face of worsening employment, is to avoid deeper social problems, including, possibly, hunger.”

With the bottom dropping out of the country’s bauxite market in the second half of the 1970s as then Prime Minister Michael Manley sought to turn the country in the new economic and social direction of “democratic socialism,” the promise of a quick recovery as his successor Edward Seaga gained the sympathy of the American government, itself failed to materialize. For in spite of Seaga’s determination to turn the country away from Manley’s socialism, and find a way to increased labour-intensive, free port exports to the United States through the Caribbean Basin Initiative, President George WH Bush and then President Clinton’s turn to drawing Mexico into the North American Free Trade Area, gave that country a comparative advantage over Jamaica, and stalled the burgeoning export businesses of textile manufactures and other industrial products. Today, with the opening of China to global free market arrangements, the prospect of development on the basis of that kind of foreign investment approach, seems almost impossible.

The efforts of both Seaga and his successor P J Patterson, to spur development through state spending didn’t, in those circumstances, help much; but it had the effect of the creation of massive public debt, which has bedevilled the country ever since. This, when coupled with persistent devaluations of the currency (in the late ’60s the US dollar was worth 89 Jamaican cents) led not only to capital flight, but to flight of skilled and professional personnel as well. Further, efforts to reorganize the sugar industry and to sustain Jamaica’s status as the premier Caricom exporter of bananas, have not, during this long period, been successful. Today the country finds itself virtually without a banana-exporting sector, the consequence of US and Latin American pressure on the EU’s protected markets and persistent hurricanes in the country. And in the face of new WTO rules on sugar exports,  efforts supported in part by Brazil (one of the main states behind the WTO decisions on sugar) to move the country towards ethanol production are only slowly taking root.

In the face of a diminishing export agriculture sector, and the rising cost of food imports, the government is now seeking to raise the issue of domestic agricultural production to ensure food security both as a means of saving foreign exchange and of creating employment. As a major tourism destination the country is a big importer of food, that situation preying on the financial resources gained from tourism, virtually the only bright spot in the country’s economy at present. But it is also recognized that this requires a major effort not only of drawing labour back into a sector long known for relatively low wages, but also an effort of educating farmers to allow them to be able to utilize the new technologies being applied to agricultural production.

Oddly enough, it has been recently observed that the Jamaica Labour Party of Bustamante was, in the second half of the 1950s, drawn to support Federation on the ground that the large land mass of Guyana could be a basis for achieving what today we call food security, and for minimizing the foreign exchange costs of food imports. But with the spurt of foreign investment through the so-called industrialization by invitation process of the 1960s and after, that party gained a sense of autonomy and of its ability to proceed to build an independent national economy, and rejected Federation and the idea of a regional economy. Today, the discussion of a regional agricultural economy with Guyana as a significant element is being brought onto the table again even among some Jamaican entrepreneurs, though the ambivalence of Prime Minister Bruce Golding about Jamaica’s inclusion in a Caricom Single Economy raises doubts as to whether, in that country, the new initiatives towards regional agricultural production are well understood.

The current budget, with its heavy taxation, now raises two spectres: the first is that of both capital and people flight, especially as neither the present government, nor the previous ones led by the People’s National Party seem capable of stemming the persistent devaluation of the currency. And the second is the prospect, as intimated in the quotation from the Gleaner newspaper, that hard times can bring further deprivation and a worsening of the crime situation that has persisted in Jamaica for so long now.

It would appear that those who think in more optimistic terms than described here, see a real glimmer of hope mainly in the continuing development and attractiveness of the Jamaican tourism product.  Even in the present negative global situation, the country has done much better in retaining its market share than most other Caricom countries.  Jamaican entrepreneurs, in terms of regional investment, and in particular the Issa group, through investments in the mid-1990s, have already established themselves in the growing industry in Cuba, often deemed to be Caricom countries’ major competitor of the future. And Jamaica, unlike some other destinations, is also beginning, in terms of costs of tourism to the national economy, to come terms with the fact that she can have a viable industry without state ownership of national airline.

Perhaps what is encouraging in the Jamaican scene is that a greater realism about the difficulties of shifting the economy onto an upward path seems, in spite of the present negatives, to be dawning at the level of the political leadership of both main political parties. Both government and opposition have had their spell at the wheel and have experienced, or are experiencing, the difficulties involved. It appears that the present budget presentation period is, in general, producing a more sober debate than has been usual.