Haddock, Fiona, Global Finance
Omar Davies, Jamaica's minister of finance, is an incurable optimist. So when it comes to explaining away the ills of a stagnant Jamaican economy, Prime Minister Percival Patterson is quite prepared to leave it to his glib finance minister."We are particularly proud of our inflation rate," says Davies. "I would say our reduction of inflation is perhaps our biggest achievement"
Jamaica's inflation figures do look impressive and reflect well on the International Monetary Fund which has spent the past two decades attempting to stabilize Jamaica's economy. In 1991 rates were soaring at 80.2%. Since 1997 inflation has been kept to single digits and is a low 5.5% this year. But the larger picture is rather depressing: The Jamaican economy is stagnant-has been for some 10 years now. And the economy shrank yet again in 1998 for the third consecutive year. The government's share of the economy continues to grow: More than half the country's failed commercial banks and insurance companies are now on its books. These assets have been taken over by the government's Financial Sector Adjustment Company-a body akin to the former US Resolution Trust.
Although Davies notes that the government has never defaulted on its domestic or external debt, the figures are formidable. The combined bank, external, and domestic debt is about one and a half times the size of Jamaica's annual production of goods and services (an estimated $6.1 billion last year). Meanwhile, the government's revenue for the 1998-1999 fiscal year was 30. …