Ja­maica gets firm vote of con­fi­dence from IMF

Jamaica Gleaner - - FRONT PAGE -

THE EX­EC­U­TIVE Board of the In­ter­na­tional Mone­tary Fund will, next month, con­sider Ja­maica’s re­quest to en­ter into a new ar­range­ment with the Fund, ef­fec­tively re­plac­ing the cur­rent Ex­tended Fund Fa­cil­ity (EFF) with what is being called a pre­cau­tion­ary Stand-By Ar­range­ment (SBA).

In a joint me­dia re­lease from the Ja­maican Gov­ern­ment and the IMF yes­ter­day, it was re­vealed that the Fund’s rep­re­sen­ta­tives and Ja­maican au­thor­i­ties reached a staff-level agree­ment on a new eco­nomic pro­gramme for the coun­try that would be sup­ported by a 36-month SBA with the IMF. This will al­low Ja­maica to ac­cess Special Draw­ing Right (SDR) 1.2 bil­lion (equiv­a­lent to 312 per cent of quota or about US$1.7 bil­lion). If ap­proved by the IMF’s ex­ec­u­tive board in Novem­ber, SDR 300 mil­lion, or about US$430 mil­lion, would im­me­di­ately be made avail­able to Ja­maica.

FIRM VOTE OF CON­FI­DENCE

“Given the Bank of Ja­maica’s com­fort­able for­eign re­serves po­si­tion, the Ja­maican au­thor­i­ties have in­di­cated their in­ten­tion to treat the SBA as pre­cau­tion­ary, that is, ef­fec­tively, an in­surance pol­icy against un­fore­seen eco­nomic shocks that are be­yond the con­trol of Ja­maica,” the joint re­lease stated.

“This new pro­posed pro­gramme, and the im­por­tant com­mit­ment of IMF re­sources that it en­tails, is a firm vote of con­fi­dence in Ja­maica. The re­quest to move to a pre­cau­tion­ary ar­range­ment is a sign of strength and re­flects the pol­icy cred­i­bil­ity and strong macroe­co­nomic man­age­ment of the Gov­ern­ment,” the IMF-Ja­maica Gov­ern­ment state­ment said.

The Gov­ern­ment’s goals – which the IMF staff team will rec­om­mend that the IMF’s Man­age­ment and Ex­ec­u­tive Board sup­port – are to: (i) re­ori­ent pub­lic re­source al­lo­ca­tion to­ward in­fra­struc­ture, so­cial pro­tec­tion, and se­cu­rity-re­lated spend­ing, while transforming the pub­lic sec­tor to be more ef­fi­cient and de­liv­ery focused; (ii) mod­ernise the mone­tary pol­icy frame­work and build the foun­da­tion for an even­tual move to in­fla­tion tar­get­ing; (iii) bol­ster the re­silience of the fi­nan­cial sys­tem; and (iv) work with the Eco­nomic Growth Coun­cil to im­ple­ment ini­tia­tives that un­lock Ja­maica’s growth po­ten­tial and pro­mote pri­vate sec­tor jobs.

The IMF is of the view that Ja­maica has made “com­mend­able progress” in its eco­nomic ad­just­ment pro­gramme over the last three and a half years un­der the EFF.

Un­der the EFF, the IMF said that fis­cal dis­ci­pline and proac­tive debt man­age­ment have helped re­duce pub­lic debt by more than 25 per cent of gross do­mes­tic prod­uct.

Ac­cord­ing to the joint news re­lease, macroe­co­nomic sta­bil­ity in Ja­maica is be­com­ing en­trenched as ev­i­denced by low in­fla­tion, the build-up of for­eign cur­rency re­serves, and a de­cline in the cur­rent ac­count deficit. Ad­di­tion­ally, im­por­tant re­forms are being un­der­taken to un­lock Ja­maica’s growth po­ten­tial.

Both the IMF and the Ja­maican Gov­ern­ment ac­knowl­edged that a re­newed fo­cus on growth and job cre­ation was needed. The SBA is aimed at sus­tain­ing macroe­co­nomic sta­bil­ity, boost­ing em­ploy­ment, rais­ing the liv­ing stan­dards of the Ja­maican peo­ple, and pro­gres­sively re­duc­ing a poverty level that re­mains too high.

An IMF team led by the Fund’s Mis­sion Chief Uma Ramakrishnan vis­ited Kingston dur­ing Septem­ber 21-30, 2016, to con­duct dis­cus­sions on a new IMF­sup­ported eco­nomic pro­gramme with gov­ern­ment rep­re­sen­ta­tives.

RAMAKRISHNAN

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