Jamaica’s fiscal and monetary policy clown show continues

Jamaica’s fiscal and monetary policy “clown show” or mismanagement continues despite the negative impact of the COVID-19 Pandemic on production, employment, income inequality, poverty, and criminality. Here is why! The primary objective of fiscal policy – the collection and spending of the peoples’ taxes – is to make sure that production and employment are at their highest levels and, further, that the levels of socio-economic inequities are reduced. However, despite collecting $225.53 billion – $17.6 billion more than it expected during the four-month period April to July of this fiscal year the government spent only $229.8 billion when the original plan was to spend $237.2 billion.

This underspending resulted in a fiscal deficit of $4.3 billion, rather than the $28.9 billion originally programmed for, although oxygen is short, nurses underpaid and overworked and still owed money for the vaccination blitzes they carried out in April. The government also underspent, although many doctors are still unemployed during the pandemic. It also underspent, although many people cannot afford to buy basic food items because their businesses and hustlings are being affected by the protracted lockdowns being implemented to contain the rampaging Delta variant.

                                                              Gov’t revenues/ expenditure April-July 2021 (J$B)

                                                             Revenues   Expenditure    Fiscal Deficit    Primary Surpl.  

                                                               225.53         229.84               4.31                 38.21

Meanwhile, although the primary role of every central bank is to promote the highest levels of employment possible with price stability, the Bank of Jamaica is planning to raise interest rates, or the cost of money, while many businesses are struggling under the weight of the depressed economic activities due to the pandemic and the lockdowns being implemented to contain the deadly virus. 

Underspending by the government and increases in interest rates or the cost of money during a pandemic is a recipe for greater levels of economic contraction, unemployment, socio-economic inequity, poverty and criminality. It is now time to end the fiscal and monetary policy clown show.