To­day's Ed­i­to­r­i­al

?The down­ward spi­ral that the Ja­maican econ­o­my has been locked in for the last two decades ap­pears to be deep­en­ing and time may quick­ly be ap­proach­ing for the T&T Gov­ern­ment to do more than sit on the side­lines mouthing ex­pres­sions of con­cern.

In the space of a few days, Ja­maica has been faced with the gut-wrench­ing, and ob­vi­ous­ly less than am­i­ca­ble, res­ig­na­tion of its Cen­tral Bank Gov­er­nor, De­r­ick Lat­i­beaudiere, which was quick­ly fol­lowed by the down­grade of the coun­try's long-term for­eign and do­mes­tic cur­ren­cy rat­ing by Stan­dard & Poor's, the rat­ings agency. The fact that Mr Lat­i­beaudiere chose to re­sign in the mid­dle of the ne­go­ti­a­tions for a new In­ter­na­tion­al Mon­e­tary Fund stand-by agree­ment–ne­go­ti­a­tions for which he was the des­ig­nat­ed lead ne­go­tia­tor–sure­ly re­flects the deep and ir­rec­on­cil­able pol­i­cy dif­fer­ences be­tween him­self and Ja­maica's Min­is­ter of Fi­nance Au­d­ley Shaw. Giv­en the ob­vi­ous con­se­quences of such a res­ig­na­tion at such a del­i­cate time, the fact that Mr Shaw was not able to per­suade the Gov­er­nor to stay un­til the end of the ne­go­ti­a­tions for the stand-by agree­ment does not re­flect well on the Gov­ern­ment of Ja­maica. The Gov­ern­ment there should have been able to pre­dict that Stan­dard & Poor's would have tak­en a dim view of the res­ig­na­tion. The rat­ing agency did, opt­ing to low­er its cred­it rat­ing on Ja­maica from CCC+ to CCC, mak­ing it clear in the ac­com­pa­ny­ing state­ment that the down­grade was di­rect­ly linked to the res­ig­na­tion and rais­ing the pos­si­bil­i­ty that the res­ig­na­tion could im­pact the time­frame for reach­ing the stand­by agree­ment with the IMF.

What was more dis­turb­ing in the rat­ing agency's state­ment was the pos­si­bil­i­ty that Ja­maica's dire eco­nom­ic straits could lead it to rene­go­ti­ate its huge debt with its cred­i­tors in an ef­fort to re­duce its debt ser­vice bur­den, which now ac­counts for about 60 per cent of gen­er­al gov­ern­ment rev­enue.�The truth is that the glob­al eco­nom­ic tur­moil has lashed Ja­maica hard­er than any­where else in the Caribbean. Re­ces­sions in most of the de­vel­oped world have meant a sharp de­cline in Ja­maica's three main sources of for­eign cur­ren­cy–its ex­ports of alu­mi­na, the earn­ings from tourists, and re­mit­tances from Ja­maicans liv­ing in Eng­land, Cana­da and the US. This de­cline has been cou­pled in Ja­maica's case with the coun­try's long-stand­ing ten­den­cy to live be­yond its means by re­vert­ing to bor­rowed mon­ey from the in­ter­na­tion­al and do­mes­tic cap­i­tal mar­kets in­stead of swal­low­ing the bit­ter med­i­cine of re­duc­ing ex­pen­di­ture. Clear­ly, then, Ja­maica needs to en­gage in some se­ri­ous ad­just­ment for which the coun­try will have to un­der­take fun­da­men­tal soul search­ing. Ja­maica's eco­nom­ic woes present an op­por­tu­ni­ty for Prime Min­is­ter Patrick Man­ning to demon­strate re­al Caribbean lead­er­ship. In June, Mr Man­ning an­nounced that ex­port­ing liq­ue­fied nat­ur­al gas to Ja­maica to stim­u­late in­vest­ments in that coun­try's alu­mi­na sec­tor was con­sid­ered a mat­ter of "na­tion­al pri­or­i­ty" for T&T. Since then, very lit­tle has been heard from the Prime Min­is­ter about this pro­pos­al, which would low­er the cost of pro­duc­ing alu­mi­na.

Giv­en the fact that T&T is in the process of build­ing an alu­mini­um smelter, which us­es alu­mi­na as its feed­stock, Mr Man­ning should have fol­lowed his an­nounce­ment by hold­ing talks with the Ja­maica Gov­ern­ment on the pos­si­bil­i­ty of swap­ping T&T's LNG for Ja­maica's alu­mi­na or the pos­si­bil­i­ty of the T&T Gov­ern­ment tak­ing over own­er­ship of the Ja­maica Gov­ern­ment's 45 per cent stake in Ja­mal­co, an alu­mi­na com­pa­ny which is 55 per cent owned by alu­mini­um gi­ant Al­coa. It could be that the talks be­tween T&T and Ja­maica await the out­come of the lo­cal Court of Ap­peal de­ci­sion in the case brought by Alutrint and the EMA against the judg­ment of a High Court judge. If so, the ne­go­ti­a­tions could be con­tin­gent on the out­come of the ju­di­cial process. At this time and giv­en the state of Ja­maica's econ­o­my, it would be ap­pro­pri­ate for Mr Man­ning to fol­low up on June's over­ture with some con­crete dis­cus­sions aimed at stim­u­lat­ing Ja­maica's pro­duc­tive sec­tor. Those dis­cus­sions should in­clude a pos­si­ble role for T&T com­pa­nies in Air Ja­maica and the three sug­ar com­pa­nies that Ja­maica is seek­ing to di­vest.