PSOJ Policy Framework for Economic Development

Based on the Jamaican experience over the past 20 years, while we have managed to make some strides forward, there is still an urgent need for the kinds of reforms and the right policy mix to bring about such an environment. After much research, the PSOJ in 1985 put forward its philosophical framework and policy initiatives which, if implemented, would advance Jamaica's economic development.

While the majority of the initiatives outlined still remain relevant, Government has implemented only some of these measures. But, there is no useful purpose served in a selective implementation of the measures. Rather, the PSOJ considers that the overall package of strategies must be viewed as integral to our success as a nation and as such, its full implementation is required if we are to reap the level of economic success which is desired.

Among the prescriptions in the PSOJ's Policy Framework For Economic Development are the following issues:-

• An economic system is a complex of inter-relations between different claimants in any society, which makes it necessasry for government's action and policy to be consistent over time and in direction, so as to maximise the efficient use of limited resources.
• While as a country, Jamaica is able to finance shortfalls by way of external borrowings, continued reliance on new loans from abroad in order to meet our international payment obligations. only exacerbates the problem for the future. The country must therefore increase its earnings and so our limited resources must be used as efficiently as possible.
• It is necessary that all industries and productive enterprises justify their existence by their ability to survive without subsidies from the rest of the society, or from external sources.
• Large public sector deficits contribute to balance of payments problems, by giving people more money to spend, (usually on imported consumption) without them adding to the supply of foreign exchange needed to pay for them. Government must therefore eliminate or reduce the budget deficit, while leaving the exchange rate free and, like everyone else, competing for such foreign exchange.
• Monetary policy should seek to maintain a stable growth rate in money supply and liquidity, which should be related to the rate of growth of real output in the economy.
• There must be a vibrant and fully functioning financial system with strong and efficient intermediaries to harness capital for the short, medium and long term needs of the private sector. Macro-economic policies must foster the growth of national savings.
• All government-owned companies, in addition to all government interests in other companies, with the exception of those which impact on national security, should be divested. There should be a rationalisation of government ministries and staturory bodies with a view to reducing their numbers to an absolute minimum.
• The process of tax reform must continue so that the tax burden is shifted away from production to consumption, ie from direct to indirect taxation.
• The PSOJ opposes price controls and income policies which distort the internal economy and retard the efficiency of free market.
• Government has a responsibility to provide for the economically defenceless - eg. for the handicapped, or those bel;ow the poverty line. However, given the magnitude of this problem, a tax credit system for pirvate companies engaged in re-training programmes, either jointly or severally, should be implemted.
• Existing barriers to investment such as political discretion in decision-making, competition between government and private sector for limited credit, government access to concessional financing, and the lack of stable policies must be removed to encourage confidence in long-term investment decisions.
• Government must direct its policies towards the development of a low inflation, high growth economy. This will lead to a sustained increase in the standard of living of the population and will provide the rsources for vital social services such as education and health and for the provision of vital economic infrastructure