Topic: Government Policies
I would first like to take this opportunity to thank your guest writer, Damien King, for his commentary, "Stop Panicking!", in Friday's Financial Gleaner. He did, in fact, bring 'economic sense' to the devaluation of our currency to date. If we accept his argument that inflation is responsible for this devaluation and control of inflation the solution to further devaluations, then it is understandable that our government has not reduced interest rates, as some have proposed, because this would increase inflation and lead to further devaluations.
But, what can be expected over the next two years, during which the Planning Institute of Jamaica tells us the nation will be recovering from the effects of the global recession? Certainly, cost-push inflation will decrease, as seen in the reduced price of petroleum; and, demand-pull inflation will reduce, as we are already hearing of increased unemployment. So, it would seem that inflation will decrease, even without government intervention. However, government needs to ensure its policies neither negate or aggravate this situation. How then are we hearing calls for increasing the minimum wage and laying off thousands of civil servants?
I do not deny that there are valid reasons for these proposals, but they are not appropriate for times as these. I would, therefore, like to encourage our professionals and the business community in general, to continue to contribute solutions to our nation's problems, but to do so in the context of our current reality and likely future.
I am, etc.,
PAUL A. HAY
PAUL HAY Capital Projects