Even Tougher Times Ahead for Jamaica !
Finance Minister Dr Peter Phillips cut straight to the point stating that the country has a very difficult period ahead. He stated there is no place for complacency in implementing Jamaica’s economic programme.
This after the Executive Board of the International Monetary Fund (IMF) approved the completion of the country’s first review under the extended fund facility (EFF).
“It is still very early days and we have to maintain the same level of vigilance ifwe are to reduce the debt and to establish the conditions for growth,” Phillips stated.
Jamaica’s economic programme is centred around the primary objective of reducing the country’s high debt from an estimated 150 per cent of GDP and thus strengthening the fiscal framework.
The IMF noted yesterday that priorities for this financial year include the enactment of an effective fiscal rule to lock in the gains from the fiscal adjustment thus far, and comprehensive tax reform to broaden the tax base and reduce distortions.
Phillips said yesterday that given the state of the country’s finances, the Government has no choice but to undertake the reforms.
“It does involve a lot of difficulty for many, many people, but it is a necessary set of reforms if we are to lay the foundations for growth,” Phillips said.
Economic activity is estimated to have contracted by 0.7 per cent last fiscal year, with a further decline from April to June. At the same time, the unemployment rate increased to 16.3 per cent at end-April 2013, and inflation reached 9.7 per cent (year-over-year) in July 2013.
The minister said he expects that Jamaica will gradually see a return to growth and job creation.
“But it is no doubt that we have a very difficult period before us, it has been difficult, still difficult, I think what we have to understand is that like any course of treatment for any individual who has to undergo a medical procedure, or any change in direction, it involves hardships, but we need to be clear that there is an end objective,” Phillips said.
He added: “For us, the end objective is the reduction of the debt, the return of growth, by setting in place the conditions that facilitate investment in all the various sectors.”
The IMF board approved a four-year EFF arrangement for Jamaica in May to support the country’s comprehensive economic reform agenda. The EFF arrangement amounts to 615.38 million SDR, or about US$932.3 million, the equivalent of 225 per cent of Jamaica’s quota in the IMF.
The financing arrangement forms a critical part of a total funding package of US$2 billion from Jamaica’s multilateral partners, including the World Bank and the Inter-American Development Bank, with each having preliminarily agreed to allocate US$510 million over the next four years.
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