The International Monetary Fund (IMF) will be not be closing its Jamaican office this year, as previously planned when its current US$1.6-billion Precautionary Stand-By Arrangement (PSBA) with the Government comes to an end this September.

IMF resident representative in Jamaica, Dr Constant Lonkeng Ngouana, who made the disclosure at a Sterling Asset Management Annual Investor’s Briefing on Wednesday, June 19, pointed out that this decision was made recently by the IMF’s executive team.

Speaking in an interview with the Caribbean Business Report after his presentation, Dr Ngouana, a Cameroon national, emphasised that the decision was not to keep the office permanently open but “to maintain the local IMF office for an additional two years after the PSBA”.

Jamaica’s progression to a PSBA in 2016 was preceded by a standby facility, initiated in 2010 and followed by an Extended Fund Facility in 2013, all covering two administrations.

“This speaks loudly about the type of partnership between Jamaica and the IMF,” Dr Ngouana remarked, referring to keeping the IMF office in Jamaica open when the norm for the multilateral lending agency is to close its local office when its programme with a country ends.

He explained that by keeping the office open it will allow the IMF to continue the strong partnership that have been cultivated with the Jamaican authorities over the years.

Dr Ngouana, who joined the IMF in 2010 through its young professional programme and who participated in technical assistance to Jamaica and Malaysia, made the point that “while the financial leg of the fund’s operations in Jamaica will come to an end in September, there are two other functions that will remain”.

Those two functions are coaching and the provision of annual financial health checks. The IMF resident representative in Jamaica stated that the fund performs as “a coach in helping countries to run their policies and how to reform their tax administrations and a wide range of other issues”.

Regarding annual financial assessments, Dr Ngouana informed that the IMF carries out such annual assessments on all its 189-member countries.

“Even if we don’t have a lending agreement with a member country, we will visit them annually to have health checks and offer our advice on policies and you will be surprised to know that the latest data show that in 2018 lending was only 14% of IMF resources for that year. The other 86% went towards coaching countries and doing the health checks of those countries.”

These two critical functions are going to occupy the time of the local IMF office for the remaining two years after its PSBA is done.

Dr Ngouana said the IMF team in Jamaica will also be observing that “all the pillars that will hold Jamaica entrenched to the gains of the past six years are being put in place such as the Fiscal Council that Minister Clarke (Finance Minister, Nigel Clarke) has been pushing for.”

He said the IMF Jamaica team is also interested in seeing to the end “the Bill currently before Parliament to ensure that the central bank is independent enough to conduct monetary policy freely.”

Managing director of Sterling Asset Management, Charles Ross, welcomed the news that the IMF office is to remain open at least for another two years.

“It’s good news for Jamaica, the partnership with the IMF has been very productive, members of the public have been appreciative of the oversight that the IMF has provided,” Ross stated.

According to the Sterling Asset Management boss, “there has been a lot of support for the direction that the country has taken for the last few years under the guidance of the IMF, so it’s a good thing.”

He was quick to point out that under the PSBA, Jamaica has not had to borrow from the IMF, so really their advisory function has been most beneficial for the country, and he was happy to hear that they are not closing their office in Jamaica.

Ross acknowledged that by keeping their office open in Jamaica, the IMF is sending a positive signal to the international community about the commitment of the country to staying the course of reform.

The economic reform programme that began in May 2013 has been a turning point for Jamaica. With broad-based social and political support for reforms, the Jamaican government—over two administrations—has embarked on a path of fiscal discipline, monetary and financial sector reforms, and wide-ranging structural improvements to break decades-long cycles of high debt and low growth.

Fiscal discipline—anchored by the Fiscal Responsibility Law—has been essential to reduce public debt and secure macroeconomic stability.

Employment is at a historic high, inflation and the current account deficit are modest, international reserves are at a comfortable level, and external borrowing costs are at historical lows.

The IMF team in its fifth review of the PSBA last week reiterated the need to institute a new streamlined and performance-based compensation framework for government employees before the next round of wage negotiations.