Current Affairs

Current Affairs

PATTERSON. our adherence to the market economy model reserves a special place for the private sector

FACED with having to present a crunching budget next month, and eager to repair his Government's strained relations with the private sector, Prime Minister P J Patterson and top officials will join 50 business leaders today to start three days of talks on developing an "action plan" for attacking unemployment and reviving the staggering economy.

Patterson has described this weekend's confab at Montego Bay's Ritz Carlton Rose Hall Hotel as part of an ongoing dialogue between the Government and private sector. But it will be only the second time since 1993, when key administration officials and business leaders met for a similar session at the elegant and expensive Round Hill Hotel in Hanover, that ministers and private sector bosses will head for a cosy getaway, hoping to find common solutions to Jamaica's economic difficulties.

LOPEZ. we are going to share whatever ideas and thoughts we have

"Our adherence to the market economy model reserves a special place for the private sector as the engine of economic growth," Patterson said in a statement last night announcing the retreat. "But we believe that the private sector and the Government must work together to ensure that the growth and development we both seek take place."

The administration has other immediate, and powerful reasons, to reach out for private sector support.
A public sector deficit, initially projected at 4.2 per cent of gross domestic product (GDP) for the fiscal year that closes this monthend, will now close at over eight per cent of GDP, causing foreign creditors to warn the Government that it has to take strong, corrective measures or face a downgrading of its debt.

In fact, the finance minister, Omar Davies, has already said that he intends to slash the deficit by two percentage points in the 2003/2004 fiscal year and return to a surplus by 2005/2006 - a move that analysts say will demand a combination of a tightening of expenditure and a heavy tax package.
"The administration needs to build consensus for the strategies it will unveil this time if it is to present a credible budget and get anything done," one administration source conceded last night. "A session like this will allow business leaders to see some of what we have in mind and for us to get their input."

But this attempt is coming at a delicate period in Government/private sector relationship. Finance Minister Omar Davies angered private sector leaders and others last month with a candid admittance at a ruling PNP constituency party conference that he had failed to rein-in spending on infrastructure projects in 2002 - despite faced with unscheduled expenditure on flood repair - because it was an election year.
Davies exacerbated the problem when he characterised Jamaica Employers Federation members, who had criticised a salary hike to parliamentarians, as thieves who had raided banks and insurance companies to help precipitate the financial sector collapse of the mid-1990s.

Although Davies apologised and both sides agreed to put the issues behind them, this weekend's summit will in part be about healing some of the still-raw wounds.
A sluggish world economy, exacerbated by the threat of war against Iraq, has also put pressure on the administration to seek private sector support.
Last night president of the Private Sector Organisation of Jamaica (PSOJ), Beverly Lopez, said that the island's private sector was willing to engage the Government to help solve the country's problems.

"We are going to share whatever ideas and thoughts we have," she told the Observer. "We sincerely hope that we will be coming up with some practical solutions to face the grave issues that we face."
Lopez will address the retreat today along with Patterson. At least 50 leaders from a cross-section of the economy will attend, Lopez said.
In addition to Patterson and Lopez, the retreat will be addressed by Davies, Minister of Development Paul Robertson, and National Security Minister Peter Phillips.

Davies will address the nation's economic condition, and Phillips will present a report on the nation's anti-crime initiative.
Lopez said that despite uncertainties over a possible war "we just can't sit by and wait to see what happens before acting on the economy".
"We must move ahead now. We must see how we can create pockets of competitiveness and move the economy forward," she said.

A similar retreat two years ago was positive, Lopez said, and focused on the need to cut bureaucracy and red tape, among other things.
Much of what was agreed upon has since been "held up" in parliamentary councils, she said.
Sunday's discussion is expected to focus on strategies for promoting investment, job creation, and economic growth.
Robertson will speak along with Arnaldo Ventura, an advisor to Patterson on science and technology.