JIS News

Today marks exactly two months since I assumed office as Prime Minister. I felt it was time for me to address the Jamaican people on the state of the nation, the challenges we have had to confront, the steps we have taken and our plans for the future.
In these first two months we have been supported and inspired by the outpouring of goodwill by Jamaicans from all walks of life, here and abroad – people who, despite all the difficulties we face, feel a sense of hope, a sense of purpose and want to help to move this country forward. I thank YOU most sincerely and I invite YOU to join with us as we strive to transform this nation of ours into a land that is just, peaceful and prosperous.
We have had to face many challenges in these first two months. Some of them we already knew about:
. a massive pile of debt that is costing us $600 million a day to service and makes it impossible for us to do many of the things that YOU expect US to do: fixing our roads, improving the quality of our schools and providing better health care;
. a high level of crime that has entrenched itself and has given Jamaica one of the highest murder rates in the world;
. the lack of employment – good, decent jobs – that leaves so many people, especially our young people, frustrated and angry;
. the widespread corruption that is like a cancer attacking so many organs of the nation’s body. But there are some challenges we have had to face that we did not anticipate. Some of them are homegrown. Even before I was sworn in we discovered that there was more than $16 billion of expenditure commitments that were hidden under the carpet, were never included in the budget but for which money had to be found. I’ll give you some examples:
. There was a budgetary shortfall of over $5 billion for salaries, mainly for teachers. But the teachers have to be paid! We have had to find the money!
. Before the elections, the then government announced $1 billion of expenditure under the Lift Up Jamaica programme. There was no money in the budget for it. But projects were carried out, work was given out. Suppliers had to be paid. Workers had to be paid. We have had to find the money!
. In June the former Cabinet gave an undertaking to provide over $1 billion to pay the interest on the bond issue which was floated by Air Jamaica. There was no provision in the budget for it. But it had to be paid. We have had to find the money!
Some of the unexpected challenges were caused by nature. We came into office shortly after Hurricane Dean had ravaged the island. There was massive damage to farmers’ crops, houses, roads and infrastructure.
All told the cost of the damage was estimated at $23 billion. The government spent over $1 billion to provide immediate relief after the hurricane in the form of relief supplies, clearing blocked roads, assistance to farmers, NIS pensioners and PATH beneficiaries. But we are still left with the mammoth task of repairing damaged roads, assisting those whose homes were damaged or destroyed, repairing schools and other public buildings. We have been hampered in carrying out repair works because for weeks the rains did not stop. Over the last two months we have had more rain than what sometimes we have had for a whole year. This has done further damage to our road network.
Let me outline what we have been able to do despite our tight financial situation:. We have provided an additional $1 billion to commence immediately repair work on roads islandwide. Now that the rains appear to have eased that work can proceed apace.
. The survey of damage to houses that was carried out immediately after Hurricane Dean identified more than 50,000 houses that suffered varying degrees of damage. We have taken time to verify the list of persons affected including providing copies to the Opposition for scrutiny. This is in order to avoid any controversy as to who are to benefit. We will be providing assistance to these householders as follows:
Minor damage $10,000Severe damage $20,000Total destruction $60,000
Disbursement of assistance will commence this week starting in the worst affected parishes of Clarendon, St. Catherine, St. Thomas and St. Elizabeth. Some persons whose houses were destroyed in severe flood-prone areas (Duhaney Pen, Old Harbour Bay, Portland Cottage and Rocky Point) are to be relocated to safer ground. We have identified relocation sites and low-cost housing units and the government will be providing the infrastructure and assistance in the erection of the units. The JDF will play a critical role in this effort.
Some of the unexpected challenges we have had to face originated externally. We have been hit with massive increases in the price of oil. Since August the price of oil has risen by a third from $72 to $96 per barrel – that’s more than a 33 1/3% increase – and it seems set to break the $100 mark. It has had a punishing effect on us because it pushes up the price of everything: food, electricity, transportation – everything! And there is little we can do in the short run because almost 90% of our energy supplies are derived from imported oil.
But we will have to do something about it for the medium and long term. We are going to have to shift our energy strategy toward cheaper sources of fuel. The much talked-about LNG project has stalled because Trinidad is unable to supply us anytime soon. We are actively pursuing other possible sources. But in the long term we will have to find ways to produce more of our own energy from our own renewable sources. Our prospects for locally produced ethanol await the privatization of the sugar industry which is on stream. In addition, there are exciting new possibilities of producing a range of bio-fuels, i.e., agricultural products that can be converted into fuel such as castor beans. This would be a major advancement because not only would it be a perpetually renewable source but it would create thousands of new jobs.
The Cabinet Secretary has been appointed to head a team to review all our options and recommend the most suitable alternatives. But, already, discussions have been taking place with potential investors regarding the production of bio-fuels. We are going to have to reduce our dependency on imported oil. We are going to have to grab the handle and stop holding the blade!The increase in world oil prices has affected us in other ways. The price of fertilizer has gone up significantly because much of the raw materials used to manufacture fertilizer come from oil. This has dealt a severe blow to our farmers who need to replant now following the damage to their crops caused by the hurricane and the subsequent rains.
And as the price of oil goes up it has increased the demand for ethanol produced from corn and other grains. Hence, their prices have also gone up. Corn prices have skyrocketed and this has had a direct impact on the cost of chicken feed and the cost of chicken meat. The price of wheat has also been affected, made worse by the fact that wheat harvests in Australia and Canada – two of the world’s largest wheat producers – have been significantly reduced because of adverse weather conditions. The world inventory of wheat stocks is the lowest it has been in 60 years. Hence, in the last two months the cost of wheat imported to Jamaica has risen by more than 50%, putting up the price of flour, bread and other staple items.
These have been rough times for the consumer and I know that many of you are hurting.All of these developments have put pressure on the cost of living and we have had to be wrestling to keep the fiscal deficit from going out of line. We have been in dialogue with the financial market players here and overseas and they have responded positively to the efforts we have made to contain what could have been a fiscal explosion, given the unbudgeted and hurricane-related expenditures that have had to be met. As a result, our most recent intervention in the financial market was secured at a lower-than-expected rate of interest.
There has been some depreciation in the exchange rate. We started the year with an exchange rate of $67.15. By the time we took office in September, the dollar had moved by $3.00 to $70.16. Since then it has moved by another $1.10 to close last Friday at $71.26. There are no fundamental factors relating to our macro-economic programmes that should cause any concern to the foreign exchange market. Some of the increased demand for foreign exchange was caused by the sub-prime crisis in the US as a result of which it was not possible to enter the market to cover the US$100 million index bond which matured recently.
Hence, bondholders sought US dollars to replenish these portfolio investments. In addition, this is normally a period of high demand by importers stocking up for the Christmas trade and lower than normal supply as we await the start-up of the winter tourist season. The Bank of Jamaica has been managing the situation proactively and the nation can be assured of stability in the foreign exchange market. Despite all the demands we have to meet, sound and strong fiscal management and restricting the growth in our public debt are not options to be selected; they are imperatives to be enforced. If not, the market will punish us severely and all of us will be worse off.
One of our biggest challenges is to tackle the high crime rate. Our crime prevention, detection and apprehension capabilities are woefully inadequate.
Our policing strategies will have to be more professional, scientific and better coordinated if they are to be more effective. A strategic review of the Police Force is well advanced. The results of that review must lead to a comprehensive restructuring of the Force so that it can be more efficient and accountable. There will be no shortage of will on the part of the government to do what is necessary to achieve that. The first task of the new Commissioner when he or she is chosen is to lead that process of transformation to provide a police service that is capable of enforcing the law and keeping the peace.
In the meanwhile, we have moved to address some of the resource deficiencies that are hampering the Police Force. We have authorized additional expenditure of $280 million to improve mobility, repair damaged police stations and provide additional protective and other equipment to enable the Police to deploy more resources to deal with crime hot spots.
But let us be absolutely clear. In order to reduce crime on a sustained basis we are going to have to focus equal attention on removing the causes of crime – the lack of jobs and opportunities, the appalling social conditions especially in our inner-city communities and the reckless parenting to which so many of our young boys are exposed. The society will not be able to reduce crime if it is producing criminals at a faster rate that it can apprehend them.
It is to this end that we have been working with our partners in the private sector on several critical initiatives to create a platform for new investments and job creation. Some of these will take time because they involve significant changes in the way we are accustomed to doing business but we are working feverishly to put these new measures in place.
I have also been encouraged at the growing prospects for major foreign investments in projects that will create significant new jobs. I have been involved personally in discussions with some of these potential investors and I expect to be able to unveil the details of a number of these projects over the next few months. I know that some of you are inclined to become impatient. I am impatient too but these things do take time. And we have only been there for two months!
We are encouraged by the improvement in tourist stopover arrivals in the last two months. Following consistent declines since the start of the year, arrivals were up by more than 4% in September and more than 8% in October. Bookings for the winter season continue to be good. The new 366-room Iberostar hotel at Rose Hall is due to commence operations in December and we are looking forward to robust activity in the tourist sector over the next few months.
And while we have had to face many unexpected challenges, we have remained faithful to the commitments we made to the Jamaican people during the election campaign:
. We have kept our promise to abolish tuition fees in government high schools. Many doubted that we could. Many declared that we would not. But this month we are paying out $750 million to the schools, some $400 million of which is to refund those parents who had previously paid the fees.
. We have kept our promise to strengthen the oversight functions of Parliament by appointing Opposition members to chair critical committees. Other measures to improve the effectiveness of Parliament are now being considered by the Standing Orders Committee and its recommendations will be implemented as soon as its report is submitted to Parliament.
There are other important measures which we promised will be implemented shortly:
. An independent authority to investigate abuses by members of the security forces;
. A Special Coroner to conduct inquests in cases where a citizen dies at the hands of agents of the State;
. Measures to criminalize breaches of the rules governing the award of government contracts so that those engaged in these wrongs can be punished;
. Establishment of a Special Prosecutor to investigate and bring to justice those involved in corrupt practices;
. Whisteblower legislation to protect those who provide information about corrupt or illegal activities;
. Reform of the libel laws to make it easier to expose those involved in wrongdoing;
. Term limits for the office of Prime Minister and provisions for a fixed election period;
. Roll-back of the pension payable to Prime Ministers and a decision to limit parliamentary salary increases to that which is paid to public sector workers.
Work is being fast-tracked on all these issues and the appropriate legislation will be brought to Parliament shortly.
There is much work that we have to do for there are many problems that have to be tackled. But we are confident that we can make this country a better place that offers its people a better life.
Jimmy Cliff was right: Yes, there are many rivers to cross but we will find our way over!
May God bless all of you and may God bless Jamaica, this precious land of ours.

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