Business

Jamaican economy remains on track — IMF

BY RICHARD BROWNE
Business editor
browner@jamaicaobserver.com

Tuesday, April 17, 2018

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The IMF supports the idea of Jamaica disengaging from it and moving towards economic independence, as was recently outlined by new Minister of Finance Dr Nigel Clarke.

In fact that was how the current lending arrangement was designed, according to Dr Uma Ramakrishnan IMF mission chief for Jamaica.

“We fully support that message,” she said.

“We have excellent relations with the government in Jamaica” Ramakrishnan said, adding that the standby agreement had been designed so that Jamaica could “sustainably exit” from the fund.

She was speaking at a video news conference on the 2018 Article IV Consultation and Jamaica's performance under the Third Review SBA from the International Monetary Fund in Washington to the IMF office at the Bank of Jamaica in downtown Kingston.

Meanwhile, Jamaica's programme implementation remains strong five years into economnic reforms, with public debt firmly on a downward trajectory, according to the latest IMF staff report, released on Monday.

“I'm happy to report it all went well.,” Dr Uma Ramakrishnan, the IMF representative said in the video news conference from her Washington offices to the IMF office.

The report stated that “all quantitative performance criteria and structural benchmarks for he completion of the third review were met”.

But lack of growth continues to be the main area of concern regarding the Jamaican economy.

According to the latest staff report, released yesterday, there are many positive elements to the economy, but “nevertheless, the hoped-for growth dividends from reforms have not fully materialised, in part due to recurring weather-related shocks and chronically high crime.”

On the positive side, “through ongoing fiscal consolidation and active debt management, the public debt-to-GDP ratio is on a firm downward path. Macroeconomic stability is entrenched, inflation is well anchored, the current account deficit has been reduced, foreign exchange reserves are being rebuilt, and supply-side reforms are improving the business environment”

Public sector transformation remains vital, however, and “some workforce reduction” will be necessary.

Agriculture with some 200,000 employees remains a key area, in need of building resilience in areas such as infrastructure improvement, including farm roads, irrigation, cold storage and processing facilities, as well as land titling so that farmers can more easily use land as collateral for loans and more linkages to the tourism sector, Ramakrishnan said.

Poor performance in agriculture, brought about largely by both drought and flood in 2017 and 2018, helped to minimise growth in the economy despite positive growth in areas such as tourism, construction and manufacturing.

But she added that the IMF did not have any input into whether Jamaica should pull away from traditional crops such as sugar and move into more non-traditional crops such as ganja.

“At the end of the day its money-related,” Ramakrishnan said, adding that the issue — particularly that of the sugar industry — should be studied carefully. “I'm not sure that it's been studied enough seriously,” she said.

In mining, the IMF was concerned about the effect that US sanctions could have on UC Rusal, but noted that the Kirkvine plant was the smallest of the three currently in operation in Jamaica.

Meanwhile, US tariffs on Chinese aluminium was of less concern for the Jamaican industry, as the Chinese-owned Alpart exported to China and not the US market.

“We don't think there will be any direct impact,” Ramakrishnan said, though noting that secondary effect is another question.

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