NOT BOLD ENOUGH

Labelling the Budget presented by Finance Minister Dr Nigel Clarke as “not bold enough”, Professor Densil Williams is pushing for the Government to dole out grants of $20,000 a month to the most vulnerable citizens for six months to help them better ride out the COVID-19 economic storm.

This, he said, would cost the country $24 billion, but could be crucial to the recovery of the economy, which is projected to contract between 10 and 12 per cent for the fiscal year ending March 31.

“We have to stimulate the economy. What we need to do is to get cash into the hands of individuals,” Williams, who is principal at The University of the West Indies, Five Islands Campus based in Antigua, said last Wednesday during a post-Budget Debate forum hosted by VM Wealth.

Williams said Clarke’s idea of issuing $10,000 to vaccinated adults over 60 years old, who do not have an income over $1.5 million, is a “good start”.

“But I think that we have to go much further and be more aggressive,” he charged.

Williams ominously warned that if the Jamaican economy does not grow at a rate of about three per cent or more, it will take at least a decade for the gross domestic product (GDP) to be returned to 2019 levels.

He said the Government had roughly $301 billion to “play with” to drive a robust recovery from the pandemic.

“If we grow at, say, three per cent post-2020, we would see a recovery roughly at about 2025,” he said.

“Critically, the programmes that we are going to spend that $301 billion on for the next fiscal year should be robust enough to drive the economic growth that we are going to be needing to recover, and most important, put back that 135,000 people into employment,” Williams argued.

The Government is planning to spend $830.78 billion to finance the affairs of the country in the 2021-22 fiscal year.

Williams said the $60-billion SERVE Jamaica programme was a good framework to anchor the recovery process, but the Government needs to be more aggressive.

Williams is also pushing for the Government to lift the tax burden on the middle class.

“When you are in a contraction, you need to come with a counter-cyclical policy, and what we need to do as one of the counter-cyclical measures is actually reduce taxes,” he said.

Williams proposed a reduction in the pay as you earn tax from 25 per cent of income to 20 per cent, which he contended will generate $12 billion for the economy.

“If you do that, and take the consumption multiplier and we look at how that will translate and reverberate through the economy, we are talking about even calling back about $4.5 billion in general consumption tax,” the university professor argued.

He said the net impact of the measure will be about $7.5 billion.

Williams also said the Government should establish a $46-billion fund that will go towards infrastructure development, with approximately $30 billion going towards projects such as roads, broadband and irrigation.

He is pushing also for $1 billion to be provided for the creative sector to generate businesses using artificial intelligence and information and communication technologies, with another $15 billion loan package that could support working capital for micro, small and medium-sized enterprises.

“We recognise that in a pandemic, in a recovery process, what we do not want is to lose business and allow businesses to close. We are looking at how we can support businesses so that they can remain open. When things get better, they can think about repaying that money that they would have gotten from the State,” Williams asserted, mentioning that the total of his proposal was $82 billion.

By reducing the primary surplus from 6.1 per cent to four per cent, Williams believes the Government will be able to facilitate the spending that is required to launch the recovery programme in an aggressive way as he has proposed.

romario.scott@gleanerjm.com