30 The Americas The EconomistAugust 22nd 2020
2 Other forms of foreign income have
shrunk. Remittances in April were a tenth
lower than a year before. Some call centres
became centres of infection and had to
close. Banana plantations are a memory
and sugar is in decline. Since March the Ja-
maican dollar has lost a tenth of its value
against the American one. That has helped
push up inflation. A journalist in Kingston,
the capital, reports that the cost of his
lunch has jumped from J$350 at the begin-
ning of the year to J$450 ($3).
Mr Holness, who won by less than a per-
centage point in the last election, held in
early 2016, seems to have persuaded Jamai-
cans that he is the man to pull the country
out of its hole. In 2019 Jamaica completed a
six-year course of austerity prescribed by
the imf(and begun under the pnp). That
held down economic growth, which was
just 0.1% last year, but has left Jamaica with
a cushion of foreign-exchange reserves. In
May the imfstepped back in with an emer-
gency loan of $520m, about 3.5% of gdp.
Fossil-fuel-rich Trinidad & Tobago has
large foreign-currency reserves. But most
Caribbean countries have less to spend.
Barbados, which is highly indebted, is
shoring up its finances under Mia Mottley,
prime minister since 2018, and getting help
from the imf. The Bahamas has not recov-
ered from Hurricane Dorian, which struck
last year. The imfis helping it, too.
Governments pray for a pickup in tou-
rism when the peak season begins in De-
cember. But their efforts to tempt back trav-
ellers may spread disease without boosting
growth much. After the Bahamas reopened
its airports to flights from Florida in July,
the number of covid-19 cases jumped. The
State Department changed its advice for
the Bahamas to a stark “Do not travel”.
Jamaica’s government is trying to avoid
the problem by requiring tourists to stay at
their hotels or resorts. But that is difficult
to enforce. Social distancing tends to break
down during election campaigns. Record-
ed infections jumped in Trinidad & Tobago
after polling day. Jamaica’s “nomination
day” on August 18th, the deadline for regis-teringcandidates,broughtoutcarousers
frombothparties.
PeterPhillips,MrHolness’sopponent,
isnotexpectedtoputupmuchofa fight.
Hehasbeentreatedforcancerandhashad
tobeatoffchallengesfortheleadershipof
thepnptwicesinceSeptember.Hisapprov-
alratingisbelow20%.Theprimeminister
calledhissnappollonthesamedaythat
JoeBidenchoseKamalaHarris,whosefa-
therwasborninJamaica,tobehisrun-
ning-mate.Jamaicansweredelighted.Mr
Holnesshopestobesafelyre-electedbe-
forevotersrememberhowmuchtheyhave
toworryabout. 7Pandemic in paradise
Covid-19, new daily confirmed cases per
100,000people,2020, seven-day moving averageSource:JohnsHopkinsUniversityCSSE *ToAugust19th20151050
Mar Apr May Jun Jul Aug*UnitedStatesTrinidad& TobagoJamaicaBarbadosThe BahamasCorrection: In“Anewkingpinontheblock”,
publishedlastweek,wemisspeltthenameofthe
protagonist,NemesioOsegueraCervantes.Sorry.C
anada’s prime minister, Justin Tru-
deau, can claim to have managed the
pandemic well. His country has had far
fewer cases and deaths as a proportion of
its population than the United States. Gov-
ernment spending to protect the economy
from the pandemic’s worst effects was
prompt and well targeted. The economy
looks as if it will recover faster than its
neighbour’s. Although Mr Trudeau’s Liber-
al Party lost its majority in the election held
in October, its fortunes recovered after the
virus struck.
Lately, though, things have gone badly
wrong for Mr Trudeau. The most visible
sign of this was the sudden resignation on
August 17th of Bill Morneau, the finance
minister since the Liberals won power in
2015, who has led the economic response to
covid-19. He was swiftly replaced by Chrys-
tia Freeland, the deputy prime minister
(who keeps that job).
Mr Morneau said he was leaving be-
cause Canada needs a finance minister
with a long-term commitment to rebuild
after the pandemic. He had decided long
ago that he would not serve in more than
two governments (the next election is due
by 2023). Ergo he should leave now. He is
also vacating his parliamentary seat.
Two other explanations are more plau-
sible. One is Mr Morneau’s involvement in
a scandal, into which Mr Trudeau has also
been dragged. The second is that the fi-
nance minister and his boss disagreed over
how fiscal policy should now proceed. Mr
Morneau’s departure enables Mr Trudeau
to spend more freely.
Parliament’s ethics commissioner and
its ethics committee are investigating
whether both men had a conflict of interestwhen the cabinet in May awarded a con-
tract worth C$43.5m ($33m) to weCharity
to administer a programme that rewards
students for helping their communities. In
the preceding five years, wepaid Mr Tru-
deau’s mother and brother more than
C$350,000 for appearing at events. Mr Mor-
neau, whose daughter worked for the char-
ity, and members of his family travelled to
Ecuador and Kenya in 2017 at we’s expense.
Neither Mr Trudeau nor Mr Morneau re-
cused himself from the decision to give
government work to we.
Both apologised. Mr Morneau says he
has repaid more than C$41,000 that he real-
ised belatedly he owed for travel costs. By
the end of July the Liberals’ approval rating
had dropped to 34%, six percentage points
lower than it was in June, according to Aba-
cus, a pollster.
A second source of tension may have
been fiscal policy. The government expects
a deficit of C$343bn this year, 16% of gdp.
Mr Morneau went along with that, but
wanted to take advantage of economic re-
covery to reduce the deficit swiftly. Mr Tru-
deau, on the other hand, is eager to boost
post-pandemic spending on social pro-
grammes and the environment without
raising taxes.
He prorogued Parliament, which ends
the ethics committee’s investigation into
the weaffair. (The commissioner’s probe
continues.) When the legislature reopens
next month he will dare the three opposi-
tion parties to vote him out in a confidence
motion. The Conservatives, who are due to
announce a new leader on August 23rd,
may vote to topple him. So might the Bloc
Québécois. But Mr Trudeau may survive
thanks to the left-leaning New Democrats.
Strapped for cash, they are loth to fight an
election. And they may find much to like in
Mr Trudeau’s post-pandemic plans.
Echoing the “just-society” rhetoric of
his father, Pierre, who was prime minister
in the 1970s, he wants to move “towards a
society that is fairer and more welcoming,
towards communities that are better pre-
pared for future crises”. He is likely to pro-
pose a prescription-drug benefit and cre-
ation of a national child-care scheme. How
much he will spend will begin to become
clear in the budget, which should have
been presented in March.
Ms Freeland, who won praise from pro-
vincial premiers for her co-ordination of a
national response to the pandemic, will
probably back that project more enthusias-
tically than Mr Morneau would have. A
green recovery is “very important”, she de-
clared in her first statement as finance
minister. It matters as much to Mr Tru-
deau’s reputation as to Canada’s future. 7OTTAWA
The resignation of the finance minister
hurts Justin Trudeau, and helps himCanadaNo more Morneau