Business

No impact on IMF expected

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Friday, October 26, 2012    

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HURRICANE Sandy could have a big impact on Government's budget, but don't expect it to influence the International Monetary Fund (IMF) negotiations, say financial analysts.

Officials are still assessing the damage of Sandy which hit Jamaica as a Category One hurricane on Wednesday, ripping off roofs, uprooting trees and downing utility poles with wind speeds exceeding 80 miles-per-hour.

Some estimate that the storm could cost the country several billion dollars. It will likely cause problems for the Government to meet revenue and expenditure targets, said financial analyst Dennis Chung.

"I think that Sandy will affect our budget, as it will cause a slowdown in revenue as well as increase expenditure needs going forward," he continued.

"And I don't see any significant aid coming, as we have seen in the past," he said.

As is usually the case, Jamaica's agricultural sector stands to be among the industries worst affected. Senator Norman Grant, president of the Jamaica Agriculture Society, said that cash crops in eastern parishes — particularly Portland, St Ann, St Mary, Clarendon, and St Andrew — have been severely affected by the natural disaster. He said preliminary results show that the banana industry sustained huge losses, and there has also been reported damage to plantain, citrus, coffee, and breadfruit. The Rural Agricultural Development Agency and the Ministry of Agriculture and Fisheries will work with the farmers affected to provide quick support to get production back to normal for the incoming Christmas period, he said.

Jamaica Public Service Company (JPS) reported that 70 per cent of its customer base was left without electricity in the aftermath of the storm. The strong winds and heavy rainfall brought by the hurricane resulted in downed poles and lines, particularly in the parishes of Portland, St Mary, St Ann, St Thomas, St James, Westmoreland, and Hanover.

Minister of Science, Technology, Energy and Mining Phillip Paulwell said he is confident of a swift return to normalcy in the energy sector.

"The Government is pushing for the speedy restoration of electricity to consumers, particularly those in eastern parishes most affected by the hurricane," said Paulwell. "I have insisted on being supplied with periodic progress updates on the restoration of power, and I will hold JPS to all commitments they make on timelines for power to be returned."

With respect to Petrojam, the state-run oil refinery that supplies the majority of the island's petroleum fuels, Paulwell said that all was on track for that entity to return to full production yesterday.

While most firms lost a full day of production on Wednesday, Jamaica Manufacturers' Association president Brian Pengelley said no major damage has been reported by its members. He said cleaning of debris has occurred and some companies have resumed normal operations.

Karen Fitz-Ritson, director of Fitz-Ritson and Associates, agreed with Chung about the impact on the budget. And, like Chung, does not see the disaster having any impact on the ongoing IMF discussions.

"I know they are trying to merge it into one, but we need to put things into context; the IMF discussion and the hurricane are two completely different things," Fitz-Ritson said.

Both Fitz-Ritson and Chung believe the IMF will continue to insist on pension reform, tax reform and public sector rationalisation.

The IMF's senior resident representative to Jamaica, Dr Gene Leon, did not respond immediately to a Jamaica Observer query.

Fitz-Ritson said Jamaica needs better management to get itself out of its current quagmire.

"The fundamental root of our problem in Jamaica is mismanagement," she said. "We need to focus on the management of the country and get certain things in place."

Additional reporting by Shamille Scott

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