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Resist the politicking and put Jamaica first

Thursday, November 09, 2017

That Jamaica will soon host the managing director of the International Monetary Fund (IMF) for a regional meeting is not, we believe, accidental.

Our macroeconomic stabilisation programme reflects policies that are not shared by many of our neighbours. We were all hit hard by the 2008 international financial crisis. Even the commodity-rich countries, such as Suriname, Guyana, and Trinidad and Tobago, are caught in the same high debt/low growth trap.

However, Jamaica is among the few countries that opted for fiscal compression, instead of trying to spend its way out of the trap.

Jamaica's stabilisation programme is arguably the toughest implemented by any country in recent world history, but we have made it work. Indeed, the IMF recently described Jamaica's reform programme as a “sustained, superb performance”.

In its September report, the IMF stated that Jamaica's economic programme “continues to deliver strong results, supporting high confidence and increasing job creation”.

The fund also stated that all quantitative performance criteria and structural benchmarks at the end of June 2017 were met and the central government's primary balance surplus had “exceeded the programme target by a healthy margin, mainly from buoyant corporate income tax”.

In addition, the fund said that “non-borrowed international reserves also overperformed, and inflation is anchored within the Bank of Jamaica's target range of 4–6 per cent”.

Such praise from an international lending agency is rare and reserved only for special cases to be highlighted as best practices. In essence, the IMF is, we believe, sending a message to the region.

The IMF's glowing opinion is echoed by the rating agencies, and was demonstrated by the excellent terms Jamaica obtained on its major eurobond issue earlier this year. Readers will recall that the Government was able to get rates normally reserved for investment-grade issuers.

As such, the achievements are being celebrated. Last month we saw GlobalMarkets publication awarding Minister Audley Shaw its prize for best finance minister in the Caribbean, while the Brian Wynter-led Bank of Jamaica has just been shortlisted for Capital Finance International's award for Best Central Bank Governance in the region.

The mature and effective collaboration between the fiscal and monetary authorities is at the heart of our success. This is indeed worthy of recognition and repetition.

The IMF recently referred to Jamaica's “deeply entrenched macroeconomic stability”, meaning that our extraordinarily tough programme segued seamlessly from the previous People's National Party Government to the current Jamaica Labour Party Administration. In other words, it has become a truly Jamaican programme.

Most will agree that the next hurdle is the public sector wage agreement and passing the pensions Bill which, as the IMF correctly noted, are “urgent for budgetary certainty and fiscal sustainability”.

We don't expect the Opposition, after running such a brilliant first leg, to resort to old strategies of seeking political advantage by encouraging labour unions, or any other groups for that matter, to destabilise the economy.

Jamaica must come first.