Kudos to the Gov’t. Now stay the course
The 180-degree turn being made by the Jamaican economy is admittedly slow, but it’s a turn in the right direction.
As such, the Government should be commended for continuing to demonstrate the kind of fiscal responsibility that led to the International Monetary Fund (IMF) this week projecting that Jamaica will experience two per cent growth this financial year due to the fact that the country has recorded positive real GDP growth in seven consecutive quarters.
The IMF’s projection came in its first review of the Stand-By Arrangement (SBA) it approved for Jamaica in November last year. Readers will recall that the agreement sought by the Government was basically an insurance policy against unforeseen economic shocks. In other words, the Administration would not draw down on the US$1.63 billion guaranteed by the policy unless there was a dire need to do so.
According to the IMF, the implementation of the programme under the SBA remains strong. The agency also pointed out that "sustained macroeconomic discipline and visible reforms have boosted stability and confidence".
Added the Fund: "Inflation reached an all-time low in 2016, and investor confidence is at an all-time high, attracting foreign direct investment. The current account deficit has narrowed significantly, supporting accumulation in non-borrowed reserves."
The IMF was also positive about the Administration’s decision to move to indirect taxes, saying that "the revenue-neutral rebalancing from direct to indirect taxes, designed around the principles of fairness, progressivity and efficiency, will further expand the tax base and work incentives". In addition, the Fund said that the budget provides for greater capital spending, even as it cautioned that continued fiscal consolidation "remains critical for further debt reduction".
All these are good indicators of an economy on the mend. As such, Finance Minister Audley Shaw should ensure that he keeps the country on this course and not engage in the kind of reckless "run wid it" spending that worsened our situation in the past.
Minister Shaw has shown he knows and appreciates the fact that investors tend to do business in markets that demonstrate stability. Therefore, this positive review from the IMF will instil confidence in the investors with whom the Government is currently in dialogue.
Indeed, those investors, we believe, would have already been encouraged after hearing Prime Minister Andrew Holness stating firmly that the Administration has been working at creating the right environment for investors to accurately measure and manage risk.
"We’re building a long-term political trajectory so that when investors come they understand that policies will transcend governments, that they will be long-lasting, and that you will be able to recoup your investments within the horizons that we’ve planned," Mr Holness stated at the ground breaking for a US$50-million hotel and automobile complex investment in Kingston three months ago.
That, we believe, is a fundamental commitment for a government to make and we encourage the Administration to stay the course. Jamaica will be better for it.