(Jamaica Gleaner) Former Prime Minister Edward Seaga has called for the Portia Simpson Miller administration to “put aside timidity” and embrace the policy of a pegged Jamaican exchange rate to the United States dollar.
It is not the first time the former prime minister, who held the reins of finance while leading the JLP administration of the 1980s, has made this proposal. However, this time his recommendation has resurfaced at a time when the Jamaican dollar is sliding as it comes under intense pressure, reaching a record $90.32 to the US dollar.
Addressing a joint sitting of the Upper and Lower Houses of Parliament yesterday, Seaga said the move to peg the Jamaican dollar to the US dollar would reduce inflation to minimal levels and lower the “still high interest on commercial loan rates of financial institutions to business-friendly levels”.
Further, the former head of government said this decision would reduce expenditure in the cost of servicing external debt and make payments on interest, profit and dividends earned by overseas investment and reducing the stock of debt.
MASSIVE INFLOWS
A pegged exchange rate, according to Seaga, would also open the door for potential massive inflows of low-interest foreign exchange for mortgage financing and investment since the risk of devaluation or depreciation of the rate of exchange would no longer exist.
“This would be revolutionary for attracting low-cost funds for agriculture, education, infrastructure and low-cost housing, creating thousands of new jobs,” he added.
“Most of all, it would restore the economic growth which has been stagnant for two decades because the increased prices which follow devaluations would cease, ensuring that none of the substance of growth would be extracted from the GDP (gross domestic product) to pay the higher prices of devaluations,” Seaga asserted.
Situated on the coastline of the world’s richest economy, the former prime minister told parliamentarians that Jamaica had no reason to be poor.
He argued that Jamaica’s strategic location creates a centre of preference for the island to exploit in developing or finishing products from the Far East (China, India) South America (Brazil) and even Europe utilising negotiated tax relief benefits of the Caribbean Basin Initiative for duty-free export to the US market.
“For years, I have been promoting this idea, based on reclaiming land in Kingston Harbour at Fort Augusta,” he said.
According to Seaga the proposal, whether at Fort Augusta or Caymanas, made sense in the same way that the development of a massive garment industry complex was established in the 1980s for exporting goods manufactured by Hong Kong firms in Jamaica, creating more than 40,000 new jobs. The initiative became a huge foreign exchange earner for the economy.
Prior to Seaga’s first presentation in Gordon House since retiring from active politics in 2005, parliamentarians yesterday showered accolades on the former prime minister for his contributions to Jamaica over more than four decades.
Among those paying tribute were Prime Minister Portia Simpson Miller who called Seaga “one of the granite figures of our time”, and West Kingston Member of Parliament Desmond McKenzie who said there was “no single politician in this country who can claim the love, affection, dedication and commitment of his constituency like the people of west Kingston to The Most Honourable Edward Phillip George Seaga”.
Seaga, who represented West Kingston throughout his time in Parliament, was a mentor to McKenzie and remains a revered figure in the constituency.
