As we prepare for the coming budget, we must accept the truth that the crisis from which the economy of Jamaica is struggling to emerge is the result of long-term structural factors.

Add to that 30 years of reckless fiscal mismanagement, excessive external borrowing, postponed adjustment and adverse external developments.

Adjustment to an economy in this situation has to be thought of at least in the medium term, ie five to 10 years, and consists of two sequential phases: ‘Stabilisation’ — which involves arresting the deterioration in the macroeconomic fundamentals; and ‘transformation — during which economic structures and institutions change their behaviour.

The decade-long duration of adjustment reflects the time it takes for confidence to develop in the macroeconomic policy that provides an environment in which economic agents and institutions begin to operate in conformity with the policy, thereby earning the incentives of the economic policy. Predictability is critical for savings and investment.

Consistency of economic policy, we believe, must be maintained during the adjustment period and must not be sacrificed to short-term political calendars and the expediency that this encourages.

An important financial and technical component of the current economic adjustment strategy which the Golding Government has courageously embarked upon is an agreement with the International Monetary Fund (IMF).

More important than the amount of money provided by the IMF is the value of its seal of good housekeeping. It is the IMF’s imprimatur which is a necessary condition of loans from the Inter-American Development Bank (IDB) and some bilateral aid agencies. It is not a guarantee of loans as is evident from the paucity of lending by the World Bank.

Having an IMF agreement is a valuable and assuring signal to international capital markets and global investors and banks. It helps in accessing finance and reduces the perceived risk of lending to Jamaica.

The process of adjustment has only started with the advent of this administration and is a long way from being over. A good start has been made, but it must be maintained until the macroeconomic fundamentals are far better and there is economic growth.

The policy framework has to remain for a few more years before it achieves the predictability that reassures a still nervous local private sector.

Any thought of not being in an IMF agreement at the time of the next general election must be expunged from the minds of all Jamaicans. The Jamaican electorate is mature enough and too politically sophisticated to be deceived by any irresponsible rhetoric of promising to end the IMF agreement.

The Jamaican public understands that the economic measures undertaken in recent years had to be done with or without the IMF, no matter which party formed the government. These are the facts of life.

Ministers of finance cannot be popular in the current economic circumstances, but more importantly they can be respected. Mr Audley Shaw needs to use his budget speech to tell the nation that Jamaica will be in an IMF agreement for the next year at least, and in all likelihood for the next two years. He need not be apologetic, but tell the Jamaican people the facts and have confidence in their political acumen. Jamaicans will understand the difficulty Mr Shaw has in balancing the budget because they, themselves, are engaged in a far more difficult task of balancing their own budgets.