Business

Economy on unstable path, says Shaw

Sunday, September 16, 2012    

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The Jamaican economy is not on a stable path, says Audley Shaw.

The Opposition spokesman on Finance made the claim on Friday, contrary to the picture of the economy painted by Finance Minister Dr Peter Phillips in Parliament earlier last week.

Shaw said that following a period of unquestionable stability in the economy, where the critical macroeconomic indicators were all in a positive direction, the country is now faced with "a precipitous fall in the Net International Reserves (NIR), an unstable exchange rate, an uptick in inflation, a likely increase in interest rates, declining values on the Stock Market, declining GDP and plunging business and consumer confidence".

"The minister's claim that the depleted NIR is seasonal is misleading, as the JLP Government maintained it at healthy levels of US$1.9 billion to US$2 billion during the worst global economic crisis since the great depression of the 1930s," Shaw added.

He said that, coupled with the negative trends, was the emerging uncertainty surrounding the Government's ability to deal expeditiously with critical benchmarks of Tax and Pension Reform, as well as Public Sector Wage settlements which can yield a credible Medium Term Economic Programme and secure an Agreement with the International Monetary Fund (IMF)".

The JLP spokesman also criticised Phillips, for failing to table White Papers on Tax and Pension Reform and noted that, despite the minister's "bold statement in Parliament" that Public Sector workers must choose between wage restraint or job cuts, the equally bold response reported in the media, of the Jamaica Confederation of Trade Unions (JCTU) is to promise a 25- point wage and benefits claim for the present Fiscal Year, 2012/2013".

"This is the environment of uncertainty, inaction and ferment in which the IMF will next week arrive for discussions," Shaw stated.

Phillips sought to assure nervous Jamaicans last week that a new IMF pact was on track for December.

"There is no delay in an agreement with the Fund. There is no delay in the timetable of negotiations," Phillips told the House of Representatives.

The finance minister was responding to questions raised by Opposition Leader Andrew Holness following his statement on the economy on the resumption of Parliament following the summer break.

Phillips denied that the issue of greater exchange rate flexibility, which would see the Bank of Jamaica reducing its role in propping up the local dollar, was a point of contention with the IMF. He also denied that he had ever suggested that "the days of low interest rates are over".

He explained that current pressures on the Jamaican dollar were created by the derailment of the previous Stand-By Agreement with the IMF which, he said, had blocked access to other critical international lending agencies, including the Inter-American Development Bank, European Union and World Bank.

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