At the end of trading on Monday, February 2, 2015, it took $115.78 to purchase US$1, compared to $107.79 a year ago, and $61.87, 10 years ago.
The Jamaican dollar has depreciated by $53.91 in the last 10 years.
This fact, by itself, should trigger alarm bells, and quite frankly it has. But, within this 10-year period, we faced some harsh economic realities, one of which is an overvalued currency in a low-growth economy. Something has to give at some point as we simply cannot have a repeat of the last 10 years.
There are many arguments advanced as to the reasons we have reached this point with our dollar, with almost everyone agreeing on poor management of the economy. That might very well be true, as good economic management usually guarantees strong economic growth. The devaluation of the dollar became a necessary evil and we now need to know the true value of our currency so as to move forward.
The thing, though, is that the country cannot remain static as this adjustment takes place. If truth be told, the country has not been static over the last 12 months. The most vulnerable in our society are, of course, feeling the pinch from increased prices, low wages, underemployment, etc, it is incumbent on Government to provide the necessary social protection, at least in the short-term.
But if one looks closely at the numbers, we are not faring as bad as it could have been. Inflation is still in single digits and projected to decrease even more. We continue to boast high Net International Reserves (NIR); the rate of depreciation of the dollar is slower (5.3 per cent for fiscal year ending January 20, 2015, 8.1 per cent for the previous period); and although youth unemployment remains high, general unemployment is at an acceptable level considering all other things. The current account deficit has narrowed dramatically; as such there will be less demand for foreign exchange (bearing in mind that the exchange rate is a function of demand and supply, when demand increases price/rate increases). Significantly also, we have been most fortunate with sharp declines in the international price of oil. Last, but by no means least, the United States economy is on the rise again.
All these facts represent a good foundation upon which we can move forward as a country. It is now time for the Government to advance plans and policies directed at achieving economic growth, as the absence of growth will put us back in the same position we were in before. We need to travel this road once and never again. We need to improve the efficiency of the public sector, reduce red tape attached to doing business in Jamaica, reduce public waste, and improve governance. We need to instil confidence back in our people that, despite our challenges, we can still make our country the ideal place to live, work, raise our families, and do business. Let us not allow political expediency to negate the gains that we have made.
Finally, and significantly, politicians need to prove to the people that the long-held negative perception that politics and politicians are inherently corrupt, and that people enter politics only for their own self-serving good is a thing of the past at worst, a farce at best.