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The NHT and the IMF Package

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  1. The NHT and the IMF Package • Taking $45bn from the NHT... Illegal and immoral? • The imf package... IS IT FAIR? Can it work? alternatives? Discussion meEting at utech: 7 March 2013 Dedicated to the late Frank Gordon

  2. Raiding the NHT • The government, with the encouragement of the IMF, has abandoned all principle. Taking $45bn of our communal NHT contributions for purposes other than housing is illegal as well as immoral. • The 50% who contribute, but who do not currently qualify, need homes and deserve homesjust as much as those in government and on the NHT Board.

  3. Build more low cost houses • . If there is a surplus then spend it on homes for that 50%. • It would create pride of ownership, civic engagement, better families, backyard farming, construction jobs, demand for local raw materials, less crime – an almost perfect project.

  4. 90,000 starter homes.. • The NHT admits that there is a need for at least 400,000 new housing solutions • So why not spend that $45bn on one-room block-and-steel starter homes at $ ½ m each, on free land (the people’s land)? It would yield 90,000 low-cost housing solutions that would benefit as many as 300,000 people.

  5. Home as a birth-right? • The struggle over land has been fundamental to many liberation movements across the world. • In the twenty-first century, given the riches that abound, a house and a little land should be a fundamental human right, a birth-right.

  6. ’Crown land’ + NHT = Homes • And it can be a reality in Jamaica if we can wrest control of the abundance of crown land, our land, from those who would only use it, or keep it, for their own advantage. • Put together with the NHT monies, which are not a gift but our contributions, there can be that house and land for all – indeed a home.

  7. PETITION • Please sign the paper petition, or the on-line petition at: http://www.change.org/en-GB/petitions/government-of-jamaica-withdraw-their-proposal-to-take-j-45bn-from-the-nht-to-pay-debt • Demand that the government use our NHT contributions for the purpose specified in the NHT Act, that is providing housing solutions for us all, not for paying debt.

  8. NHT Act (1)

  9. NHT Act (2)

  10. Statement by NHT Chairman

  11. NHT Financial Statement

  12. If not your NHT monies, then what? We are told the IMF monies are (and were!) to plug the hole in the budget and to deal with our massive trade imbalance • But there are other sources of finance such as: • Unpaid taxes / graduated tax rates • Cutting out Favour Waivers • A culture of caring / sharing through taxation • Spending can be reduced by: • Cutting out privileges at the top • Stopping white elephant projects • Eliminating corruption • Trade can be better balanced by: • Eliminating un-necessary imports • Become more competitive and exporting more

  13. But there is a LARGER picture... • The proposed misuse of the NHT funds is only one part of an IMF package that is oppressive, unjust and self-defeating. • Oppressive to those already struggling to make ends meet... (PATH) handouts are demeaning • Unjust because most of us did not benefit from or create the debt. Debt payments transfer money from the poor to the more privileged • Self-defeating because slow, or no, growth will mean more debt in the future

  14. Oppressive and Unjust • The hardships faced by ordinary people, the 99% across the world, are getting worse, just as they are in Jamaica. There are less jobs, less income, less services, less opportunity, less hope - in fact less of everything except hardship. • In October 2011 the IMF said Jamaica's poverty rate was 43% of the population, that's 1.2 million people living on less than J$212 per day. And yet the Jamaican government claims only 16% are in poverty, defined as those living on less than J$257 per day! No wonder very few believe the real unemployment rate is only 12% as we are told.

  15. Not much left for the people...

  16. Self-defeating – Austerity doesn’t workEconomic growth is needed instead In any case, austerity doesn’t work. It has, by the IMF’s own admission, caused three times the damage (contraction) to the Greek economy than was predicted. Are we to really believe in a medicine that has failed consistently over the past thirty years? Jamaica’s lack of growth: GDP per capita Borrowing more to get out of debt?? It didn’t work following the 2010 IMF package, as we all know. So now we are saddled with $1.75 trillion in public debt, and growing every day

  17. Better pain for gain... than for nothing A radical alternative package would not be pain-less. It might well cause more pain in the short-term than kicking the can down the road. But even mainstream commentators have doubts about the IMF package which aims to increase the primary surplus to 7.5% of GDP, bringing down the debt from 140% of GDP to 95% by 2020. On ‘Direct’ with Garfield Burford on 6 March, Dr. Damion King (Head of Economics at UWI) said the current IMF package, even if fully implemented, would not reduce the debt level significantly, leaving the economy vulnerable. He thinks it will take much longer, even if not derailed by circumstances (hurricanes, global recession) beyond our control. Thus he argues that debt reduction should not be the prime target but creating a sustainable economic base. Dr. Christopher Tufton, head of CAPRi, emphasised the need for growth if we are to ever get out of debt. But he says the IMF package likely means no growth and thus it can’t, and won’t work. It is too constricting.

  18. An alternative... 1) Put a moratorium on debt servicing, including foreign debt 2) Undertake a forensic audit of the debtas Ecuador did successfully 3) Repudiate the large amount of debt which is odious / illegitimateespecially the FINSAC part for which the IMF must take responsibility 4) Stop the cutbacks which only make matters worse, shrinking rather than growing the economy. 5) Stop borrowing - we can survive without the IMF - the government collects more in taxes than is spent on serving the Jamaican people (the primary surplus). We can also cut out wasteful and corrupt spending. 6) Collect taxes from those same wealthy individuals and businesses who currently avoid paying. 7) Re-visit our relationship with the WTO - our economy is much too open to unfair competition. We must eliminate un-necessary imports. 8) Increase productivity and competitiveness - generating growth / creating jobs / improving livelihoods...

  19. The fiscal budget...more is collected in taxes than is spent on the people

  20. 2011-12 Budget – J$m

  21. 2011-12 Budget – J$m

  22. Government Finances - % of GDP2006-2011

  23. Can we survive without the IMF? There are three basic economic (and social) problems: • Balancing the fiscal budget (more-or-less) • Balancing foreign trade (or at least the current account) • Increasing productivity and competitiveness / generating growth / creating jobs / improving livelihoods The IMF package really only addresses the first problem, and possibly ineffectively. If the alternative of a debt moratorium were adopted, the fiscal budget would not be a problem. It would also allow resources for increased productivity and hence greater exports. But imports would also need to be controlled to deal with the trade imbalance

  24. Trade BalanceExports & Imports as a % of GDP

  25. The foreign account 2011 : US$m

  26. The foreign account 2006 - 2011

  27. Productivity and Growth Beyond the financial and trade gaps, the underlying challenge is to increase productivity and competitiveness, generating growth, creating jobs, improving livelihoods... The IMF package undermines both growth and productivity, directly and indirectly, in the short and long term: • Cutting jobs (and therefore tax intake) • Reducing demand – through less jobs / real wage cuts -leading to business failures / loss of more jobs etc • Cutting spending on education / training / infrastructure which are needed to increase productivity

  28. Not much here to enhance Productivity and Growth

  29. Interest v Capital Expenditures

  30. Infrastructure Spending by Public Bodies

  31. Global Competiveness Index 2011-12Jamaica at Stage 2

  32. Pillars of Competiveness3 stages

  33. Doing Business in Jamaica 90out of 185 countries

  34. Corruption Perceptions Index 201283 out of 176 countries

  35. Better pain for gain... than for nothing Ecuador has tried a different path, with some success and is now on a firm growth path. Little Belize has re-negotiated its foreign debt. Cuba survived a 50% drop in GDP after the collapse of the USSR. In the 1970s, there was a call for a New International Economic Order, with Jamaica part of the G77 pushing it. A new order is needed even more now to stop finance capitalism feeding further off the carnage it created, leading up to the crash in 2008.

  36. Debt bondage The debt is deliberate because for the privileged it means easy earnings. This applies both locally and on a global scale. Others have become caught up in its web. The IMF represents the interests of foreign holders of debt – it is their debt collector. The banks have become gambling houses. Gambling with your money and the money which governments allow them to invent, and then exploit. Banks now no longer lend much to the productive sector. Feeding off the tax-payer through compliant governments is much easier. It might well be necessary to nationalise the banks – after billions of dollars of public funds were pumped into the banking system in the 1990s...

  37. Another way... • There has to be another way. Finance should oil the wheels of production, not feed off them. And then people could improve their lives. • The resources are still there... people, farms, factories, equipment, know-how... the banking system should help bring these together, not strangle us in debt. • The future is up to us. We can settle for less, or strive for more.

  38. An alternative... 1) Put a moratorium on debt servicing, including foreign debt 2) Undertake a forensic audit of the debtas Ecuador did successfully 3) Repudiate the large amount of debt which is odious / illegitimateespecially the FINSAC part for which the IMF must take responsibility 4) Stop the cutbacks which only make matters worse, shrinking rather than growing the economy. 5) Stop borrowing - we can survive without the IMF - the government collects more in taxes than is spent on serving the Jamaican people (the primary surplus). We can also cut out wasteful and corrupt spending. 6) Collect taxes from those same wealthy individuals and businesses who currently avoid paying. 7) Re-visit our relationship with the WTO - our economy is much too open to unfair competition. We must eliminate un-necessary imports. 8) Increase productivity and competitiveness - generating growth / creating jobs / improving livelihoods...

  39. UTOPIAN? Some would say that there is no alternative (TINA). Others say the alternatives are utopian (wishful thinking, pie-in-the sky, unrealistic). Thankfully our national heroes did not feel bound to think only ‘within the box’. Millions across the world a demanding a better world. About time we joined them?

  40. Wake up youth!(George Davis – ex-student at UTECH – letter in the Gleaner - 6 March) • As young Jamaicans, we've done a massive disservice to the hard-toiling taxpayers who've contributed to our education. Given such sacrifice, why then do we idle with the gifts we've been given? Why do we spend so much time and energy cavorting or thinking of cavorting, as our country crumbles around us? • We poison our minds with what we read. We know everything about dancehall, yet have no interest in Government's plan to raise the primary surplus to 7.5 per cent of GDP up to the year 2020 to pay debt. This debt, which we were told would improve education, health care, national security and infrastructure... is destroying us • So many of us fervently supported Obama's two elections to the United States presidency, arguing passionately and zealously about why he's the best choice for Americans. Yet we duck any talk about politics in our own country, often waving the lazy argument that it's too corrupt to warrant discussion. Shameful! • Wake up! Think about nation building. Think about how your effort and endeavour will help this great nation re-establish itself as the gold standard in the Caribbean region.

  41. The late Frank Gordon • Frank Gordon died this week at his home in Harbour View. He was born on Love Lane, behind Liberty Hall, the legacy of Marcus Garvey. Frank was self-educated, a follower of Garvey and St. William Grant. He spent his adult life keeping their teachings alive. • I only wish that those in government spent more time rubbing shoulders with the likes of Frank to remind themselves of the bigger picture, of what the struggle (and sacrifice?) should really be about.

  42. Thank you!! Paul Ward Campaign for Social & Economic Justice 542 7600 : pgward@cwjamaica.com www.csej-jamaica.org