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The pains of a sliding dollar

By Raulston Nembhard

Wednesday, August 08, 2018

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The rapid devaluation of the Jamaican dollar against its US counterpart is a cause for concern, especially among the poorer sections of the society. By dint of hard experience over the years every Jamaican now knows that any precipitous slide in the dollar is an occasion for hardship and great pain on them. They know instinctively that a sliding dollar inevitably leads to an increase in the price of almost every good and service that is produced in the country. The increase in fuel prices, which is one of the biggest indicators of pain from a sliding dollar, will reverberate throughout the entire economy with all its resultant painful effects on people's spending power.

This is a mindset that has developed over the years. It has nothing to do with the politicisation of the exchange rate, but simply the existential economic reality that is attendant on a devaluing dollar in the Jamaican experience. So when Finance Minister Dr Nigel Clarke says that concern for the sliding dollar is related to a politicisation of the exchange rate over the years, he is indulging a sleight of hand which does not comport with the deleterious effects of a sliding dollar on the poorest Jamaicans. Yes, Opposition politicians will always use the devaluing dollar as an occasion to score political points against a sitting Government. Both sides of the political divide do this.

What Clarke seems to ignore in characterising the matter in this way is the real pain that comes to the poorest consumers and the fledgling middle class when the Jamaican dollar is at the mercy of US dollar. It masquerades the real suffering that they experience because, if merely playing politics with the dollar is the major problem, then, in the Jamaican context of tribal politics, it is not something to be taken seriously. People's concerns about the dollar can then be easily brushed aside as politics, thus ignoring the real economic pain attendant on a Government's inability to halt the slide. It is not so much the politicisation of the dollar that worries people, as Dr Clarke avers; it is the cataclysmic effect that it has upon their lives that is of greater moment. It is the pain they have to endure in their pocketbooks that gives them concern.

And pain there is. July has been a very hot and dry month. There is drought in the traditional breadbasket areas of our country, especially in south St Elizabeth and southern Manchester. With drought comes scarcity and the inevitable increase in the price of popular staples. As if this were not enough, the gods seemed to have turned a blind eye on us as it was the month in which gas prices have been at their highest in recent times. So a series of factors have come together to deliver a body blow to us, and a sliding dollar has only exacerbated the pain that people are feeling. And we are yet to be given a cogent explanation by the Government for this slide.

Expecting me to pull a rabbit from the hat, my workers who are helping me with the refurbishing of a dwelling have already indicated that they want an increase in wage. I did not have to ask the reason, because the answer was already on their lips which can be summed up thus: “Di dolla a slide sah, and bus and taxi fare a go up.”

This is part of the existential reality facing many Jamaicans and glib explanations for a sliding dollar and rising gas prices will not suffice. Yes, as the governor of the Bank of Jamaica, Brian Wynter, says, the dollar will go up and it will go down, but when it goes down, as it has been doing in recent weeks, it does a great deal of damage to people's way of life.

The people want to know that you, Governor, and the Government have a handle on what is taking place; that you have a fair grasp of what is promoting the slide, and what to do about it. Importantly, they want to be given some comfort that you and the technocrats at the Ministry of Finance are sufficiently mindful of the pain they feel from a precipitously sliding dollar. Consumers are at the mercy of big corporations as they can easily justify the increase and blame it on the declining dollar — whether this is so or not.

As we evaluate the sliding dollar, it is heartening to note that Prime Minister Andrew Holness has indicated that he will be looking into the pricing mechanism for fuel by Petrojam. This is to ensure transparency in the computation of the price. I have long held the view that rising fuel prices cannot be justified on mere supply or demand factors only or on external shocks from the international marketplace.

In fact, these external shocks have always been used to justify fuel price increases. Yet, when the price of oil fell to as low as US$35 per barrel, the price of fuel to the Jamaican consumer remained relatively high. There was no noticeable reduction in the price of fuel. I concluded, then, that the answer had to do with the pricing mechanism of Petrojam and the mark-up they arrive at in the pricing before the commodity is sold to the retailers for distribution and sale to the end user. I remain convinced that this is where the problem lies and more openness and transparency must be engaged.

We are going through a very interesting period in our country. Those who are able to navigate the rough currents must not be unmindful of the need of the poor and vulnerable who do not even have a canoe to paddle the rough streams. There are those who wall themselves off from the concern of the ordinary person and live as if it is only their concerns that matter. Those who can scrape more for themselves at the expense of these poor will do it. There is no morality to constrain them, save that of their own unenlightened self-interest. But, as the song says, we are all in this thing together and we have got to work it out. This may be something useful to ponder as we celebrate 56 years of Independence.

Dr Raulston Nembhard is a priest and social commentator. Send comments to the Observer or stead6655@aol.com.

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