Holness says the fiscal fallout from the Finsac debacle must not be repeated

KINGSTON, Jamaica – Recalling the economic hardships stemming from the aftermath of the Financial Sector Adjustment Company (Finsac), Prime Minister Andrew Holness says he “shudders to think” what will happen to Jamaica if history repeats itself.

Finsac was registered in January 1997 with a mandate to restore stability to Jamaica’s financial institutions. Critics have since expressed that, rather than bringing stability, Finsac’s efforts largely led to a divestment and a “fire sale” to foreign investors.

The Finsac debacle is reported to have cost the Jamaican economy about $120 billion, or about 40% of gross domestic product (GDP).

Noting that his administration has worked tirelessly to correct some of the economic disasters created by Finsac, Holness said a financial relapse would be damaging to the country’s economy.

“I am afraid of what will happen if the stable hands were taken off the wheel, to put the hands of beginners on the wheel. I want you to appreciate that when I tell you that I shudder to think what might happen, it is because I lived in Finsac and saw as a result people were suffering,” he said while addressing a general meeting of Young Jamaica at the University of the West Indies on Wednesday night. “I saw what happened, how the entrepreneurial class was completely destroyed not only by the bad economic policies related to the regulation of banks, but it was also destroyed because it created a false idea that investing in government paper was not really invest. It created what I call a lazy set of entrepreneurs and now it’s this lazy set of entrepreneurs who want to come and run the country.”

“We must never allow this notion to return to our country because right now, this government, this administration, has properly established what it means to be an entrepreneur and create wealth,” he continued.

Passionately recalling the pains of Finsac, the Prime Minister urged today’s generation not to be blinded by the few who he said benefited from the crisis.

“The people who are talking now, the people who are looking to lead the country now, they benefited, they became millionaires and billionaires behind the backs of the people … one of their own MPs described it as the biggest transfer of wealth in poor to the rich.” he said. “I have no doubt that this is what they want to do to the Jamaican economy, to get rich on the backs of the poor. I will not allow that to happen and I hope my voice will carry me.”

Holness said that while Jamaica is not where it needs to be financially, the nation has made significant progress under his administration. Noting that the unemployment rate has fallen from 13% to 4% during his leadership, Holness said the country is on a path of “promise and progress and there is prosperity”.

“There is no mystery as to why it is that as the Jamaica Labor Party came in, unemployment went from 13% to 4% today. You know why,” he asked. “It’s because investors now have to make real investments that employ people and government borrowing is not crowding out real investment. These are some of the fundamental changes that have taken place in our country. I am determined to ensure us that we don’t fall into the rut we fell into when the country was destroyed in the 70s, rebuilt in the 80s and then fell into a lull for 18 and a half years.”