Clarke: Jamaica has no need to borrow more funds from IMF

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Tuesday, March 12, 2019

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Minister of Finance and the Public Service Dr Nigel Clarke says that Jamaica cannot be proud of the country's 32-year relationship with the International Monetary Fund (IMF).

Speaking in his initial annual budget debate presentation in Gordon House last Thursday, Dr Clarke said the current period of fiscal prudence did not arise automatically.

“Jamaica was forced to confront its difficulties by turning once again to the International Monetary Fund (IMF) for support,” Clarke said.

“Jamaica has had 16 Stand-By and Extended Fund Facility agreements with the IMF since independence, which have had a cumulative length of some 32 years. We cannot be proud of that,” he told the House of Representatives.

“It is inconsistent with the Jamaican identity — our identity — of a proud and independent people with a message for the world. Yet, for my generation, all we have ever known, is life in and out of structural adjustment programmes with the international community. It falls to my generation — our generation — to change that,” said Clarke, who was born on October 20, 1971.

Jamaica's relationship with the IMF dates back to 1977, when the Administration of the late Prime Minister Michael Manley turned to the fund in a desperate bid to rescue the local economy, which was suffering a severe shortage of foreign exchange. Jamaica stayed with the fund until 1995 when the P J Patterson Administration ended that relationship. But, the relationship with the IMF resumed during the Bruce Golding Administration in 2010 and was later suspended until 2013 when the previous government settled for an External Fund Facility (EFF) agreement. The EFF was replaced by the current government's Precautionary Stand-By Agreement (PSBA) in October 2016.

However, it is understood that, since 1977, seven of the 12 agreements with the IMF were cancelled because Jamaica failed some performance tests. Of the five that were completed, two required special waivers of performance tests by the IMF. But, the current PSBA seems on course to end on mutually acceptable terms between September and October, this year.

“Jamaica's economic reform programme has delivered for Jamaica, is delivering for Jamaica, and will continue to deliver for Jamaica. We must be like Joseph, the son of Jacob, who stocked the barn in good times, so we can retrieve from our own barn in bad times, instead of having to depend on the international community. The Joseph principle should be our principle,” Clarke told the House of Representatives, noting that Jamaica's engagement with the IMF, this time around, has been different.

“With just under three years of the previous administration and just over three and a half years of this Administration, Jamaica is set to complete our engagements with the IMF, having fully lived up to our commitments,” he pointed out.

The current PSBA is scheduled to end by October this year, after which the country is not expected to seek an extension of the lending relationship.

According to Clarke, the PSBA became Jamaica's programme with IMF support. He noted that the current Administration terminated the US$930-million EFF, which started under the previous government in 2013, six months into office in 2016. In its place Jamaica entered into the larger US$1.6-billion PSBA which involved no loans.

“We are now 2 years into this precautionary standby Facility with 6 months to go, and, Mr Speaker, I am proud to say that, so far, is moving in the right direction,” Dr Clarke said,

“For these reasons, the fundamental essence of Jamaica's economic reform will be maintained, even when our agreement with the IMF ends,” he said.


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