JAMAICA IS IN BIG TROUBLE WHEN GROWTH IN THE DEBT STOCK OUTPACE ECONOMIC GROWTH
Even if tourism grows 3.6% on average for the next 10 years the marginal cost to subsidized tourism growth in Jamaica would be far greater than the marginal returns, as increasing price pressures resulted in lower yields which mean more devaluations. The fact still remains that if the government does not incur any additional cost and the dollar remains stable. Excluding the cost of the South-East Highway, it would take us some 30 years (2046) or 3 decades to recover the total economic cost of attracting tourism investment since 1990, estimated at US$32.0 billion. This write-down of US$32.0 billion over some twenty-five (25) years of devaluation represents the cumulative sum of US$16.0 billion (average addition to debt of US$561 million annually) in the National Debt, plus interest payments, the balance of trade deficits and some US$10.0 billion uncirculated currency held among the financial sectors and private individuals of which US$5.3 billion in stock market capitalization.
The arrival to revenue ratio will not sustain this level of debt spending from an economic development perspective, there is an urgent need to reduce the room to revenue ratio where we are relying on more and more room growth in a diminishing marginal return industry at an enormous cost to the economy since the 1990’s. In other words, if no further devaluation or spending on tourism-related infrastructure occurs, it would take us some 30 years (2046) or 3 decades to recover the current level of public investments already made to attract and develop the tourism industry in Jamaica. By 2046 the total combined arrival population is estimated to be around 14. 7 million visitors which would be needed to recover the US$34.0 billion in net economic cost incurred to date.
By Silbert Barrett
