Minister of Finance and the Public Service, Hon. Audley Shaw, has criticised his predecessor, Dr. Omar Davies, for failing to take responsibility for the 1990s financial sector meltdown, which led to the establishment of the Financial Sector Adjustment Company (FINSAC) in 1997.
Finance and the Public Service Minister, Hon. Audley Shaw (left), lends an ear to Senior Fellow at Stanford University’s Center for International Development, Professor Paul Romer (right), during the Planning Institute of Jamaica’s (PIOJ) seminar on the domestic financial and capital markets role in Jamaica’s transformation, on Wednesday at the Jamaica Pegasus Hotel, New Kingston. Partly hidden at centre is pro Vice Chancellor, University of the West Indies (UWI) and Moderator of the panel discussion, Professor Alvin Wint.
“It is not only unfortunate, but disingenuous of the former Minister to seek to simplify and to justify his own position, by suggesting that the problem was created by a few bankers,” Mr. Shaw said.
“Whose policies was it that drove up those interest rates? Which Central Bank was it that set the Repo rates, and which Government was it that set the Treasury Bill rates that caused interest rates to be so high (then)? I hope they are asking him those questions, even as I speak now,” the Minister said.
Mr. Shaw was referring to the responses from Dr. Davis at Tuesday’s meeting of the Commission of Enquiry investigating the circumstances surrounding the financial crisis, which led to the closure of over 40 financial institutions.
The Minister was speaking at a seminar on the domestic financial and capital markets role in Jamaica’s transformation, staged by the Planning Institute of Jamaica (PIOJ) at the Jamaica Pegasus Hotel, New Kingston, the same venue as the enquiry, on Wednesday (November 25).
“I was disappointed to hear the former Minister telling the Commission of Enquiry yesterday, and (see it) blaring from the front pages of the newspapers today, as Shaggy would say, ‘it wasn’t me’. Saying it was a few bankers’ rash and bad decisions that caused the collapse,” Mr. Shaw related.
“I believe that the first responsibility that we have, as a country, if we are going to make the kind of transformation that is needed; the first point of departure is to accept responsibility, and we must accept responsibility for bad policy errors and bad policy judgment,” he suggested.
He said that failure to accept responsibility for the crisis would condemn the country to repeat the same mistakes.
“It is in that context that I want to suggest that, beyond taking responsibility, we need to have a whole paradigm shift in our thinking of how we make money in our country,” Mr. Shaw went on.
“We cannot, for any point longer, continue to believe that we must discard all notion of entrepreneurial activity in terms of inventing and producing goods and service,” he stated.
He said that Jamaica has to return to the fundamentals of the economy, and understand that, ultimately, the vibrancy of the capital market will only be sustainable, and reach new heights, if that vibrancy is underpinned by the productive capacity of Jamaicans.
“Government paper can’t just move around in a circle, while we ignore the fact that our people are not productive because our entrepreneurs don’t feel that the environment is ripe to open factories and produce things,” he warned.