Reopen talks with IMF, Golding urges Clarke

THE GOVERNMENT has been urged to open talks with multilateral financial institutions as the parliamentary Opposition weighs the ultimate impact the COVID-19 pandemic will have on the Jamaican economy.

Ratings agency Fitch last Friday estimated that the Jamaican economy was likely to contract by four per cent this year – one percentage point more than forecast by the Bank of Jamaica two weeks ago – amid the novel coronavirus outbreak.

But Mark Golding, the opposition spokesman on finance, has insisted that the Government should reach out to the International Monetary Fund (IMF) and others immediately.

“The Government should be talking to the multilateral financial institutions with which Jamaica has earned good standing, after seven years of fiscal prudence, to prepare them to assist us in funding a comprehensive protection programme for our people that will protect our society and economy during this period of deep crisis,” Golding told The Gleaner, adding that some of his St Andrew South constituents have struggled to cope amid the outbreak.

However, Finance Minister Nigel Clarke said in late March that the Government was not intent on re-engaging with the IMF – at least not for now.

“We have thought about all the options, and all of them are on the table, but at this point in time, that is not on the cards because of the position that Jamaica is in today,” Clarke told a Gleaner Editors’

Forum.

Golding said that the Government should ramp up its social-protection programme, pointing to countries such as St Vincent and the Grenadines that have spent more than one per cent of GDP on similar programmes.

CONDITIONAL CASH TRANSFERS

The Holness administration has launched a COVID-19-targeted programme of multiple conditional cash transfers to individuals and businesses at a cost of J$10 billion, or 0.5 per cent of GDP.

The total cost of the conditional cash transfers is expected to last three months: April, May, and June.

However, there is scope that it might be extended beyond this period.

The opposition spokesman said he remained hopeful for a positive rebound in 2021, but called on the Government to be prepared by protecting those most vulnerable.

“To be ready for the world economy, we need to ensure that we protect the social fabric of the nation and avoid serious damage to economy. That will require a more robust fiscal response.

“In particular, a one-time compassionate grant of $10,000 will not be enough to protect those citizens and keep the society from unravelling,” he said.

Managing director of the IMF Kristalina Georgieva has said that COVID-19 would push the global economy into the deepest recession since the Great Depression, with the world’s poorest countries suffering the most.

Georgieva said there was no question that 2020 would be an “exceptionally difficult” year. The IMF is forecasting a partial recovery in 2021 if the pandemic fades in the second half of the year, allowing the gradual lifting of containment measures and the reopening of the global economy.

“I stress there is tremendous uncertainty around the outlook,” Georgieva said.

“It could get worse, depending on many variable factors, including the duration of the pandemic.”

She also said that the IMF was prepared to commit its US$1 trillion in lending capacity to providing support to nations that need help dealing with economic fallout.

“We are responding to an unprecedented number of calls for emergency financing from over 90 countries so far,” she said.