PM blames policies, corruption for poverty; defends IMF programme

Saturday, November 18, 2017

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PRIME Minister Andrew Holness yesterday debunked claims that International Monetary Fund (IMF) programmes are responsible for poverty in Jamaica and the wider Caribbean, blaming instead bad policies and corruption.

Holness, who was speaking at a press briefing at the Office of the Prime Minister (OPM) following a meeting with IMF Managing Director Christine Lagarde, admitted that “discussions with the IMF have not neglected the fact that poverty, as measured by the 2015 Survey of Living Conditions, has increased”.

The prime minister was referring to the most recent Jamaica Survey of Living Conditions conducted by the Statistical Institute of Jamaica, which stated that the prevalence of poverty in Jamaica is 21.2 per cent. According to the study, the figure is at the second-highest level in almost two decades.

In the 2014 survey, the prevalence of poverty was estimated at 20 per cent, which followed the 24.6 per cent recorded in 2013.

Jamaica had brokered a four-year Extended Fund Facility US$932.3-million deal with the IMF in 2013. That deal expired in 2017 and a three-year Precautionary Stand-By Arrangement valued at about US$1.7 billion was approved.

Yesterday, Holness said: “The imposition of hardship has been generally [due to] the policies that the countries in the Caribbean pursued for many years, and it is disingenuous to say that the IMF imposes hardship.

“I think there needs to be a level of honesty and maturity in the discussion about how Caribbean countries have managed public finances and, by and large, we have consumed without regard for production and productivity, and that consumption has led to high debt,” Holness continued.

He added that “much of that consumption has been consumed by corruption, so we are now left with high debt”.

“People who did not benefit from that consumption had to be paying for the consumption, so it has caught up with us,” the prime minister said.

Holness said Jamaica is now at the point at which it has to be repaying what it had borrowed to cover its debts.

“The stakeholders in Jamaica realised that they had to make a sacrifice, and the labour organisations had to make a sacrifice, and the sacrifice doesn't end — as I said in my statement, it is a journey. And the level of our cooperation and the honesty of the cooperation will determine the length of the journey,“ he reasoned.

Meanwhile, in response to the claims, Lagarde said: “When the IMF is called upon in helping a country which is in a very serious balance of payment situation, clearly some difficult measures have to be taken in order to restore its position, and that means, indeed, that includes measures on the fiscal front.”

She explained that this meant raising revenues, reducing costs, or a combination of the two.

The IMF head also said the fund encourages “that, while having the objective of a primary surplus will be instrumental to reducing the debt and to guarantee the economic independence that the prime minister was talking [about], the fiscal policy must be growth-friendly and must focus on those measures that will actually enhance growth and encourage investment conducive to the creation of jobs — which is clearly the best way to fight with poverty and also inequality”.

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