In an otherwise promising outlook for the post Precautionary Stand-By Arrangement (PSBA) with the International Monetary Fund (IMF), Jamaica’s short -term growth figures seem threatened by the planned temporary closure of the Jiuquan Iron and Steel Company (JISCO)/Alpart refinery in Nain, St Elizabeth.

This was referred in a joint statement issued in Kingston on Wednesday by Prime Minister Andrew Holness and the director of the IMF’s Western Hemisphere department, Dr Alejandro Werner, following the sixth and final review of Jamaica’s financial and economic programme, which was supported by the fund’s Precautionary Stand-By Arrangements.

“The economy is estimated to have expanded by 1.9 per cent in the 2018-19 financial year buoyed by mining, construction and tourism, although the short-term growth outlook is unfortunately, clouded by the pending 18-24 months closure of Alpart to facilitate investment upgrades,” the reference in the joint statement said.

It was released on the IMF’s website, after the fund’s team led by Dr Uma Ramakrishnan, ended its review of Jamaica’s financial and economic programme.

Transport and Mining Minster Robert Montague, on September 10 confirmed reports, originally carried by the Jamaica Observer, that the Nain plant could be closed for 18-24 months to facilitate an upgrade and modernisation. The plant had been closed for close to nine years under the ownership of UC Rusal before it was bought and reopened by China’s Jiuquan Iron and Steel Company in 2017.

The statement issued by the IMF congratulated Jamaica for the successful completion of the latest economic reform engagement, supported by the fund’s Stand-By Arrangement, and noted that there will be no more ‘IMF tests’ to be passed, as the PSBA concludes on November 8.

It also took note of the fact that Resident Representative Dr Constant Lonkeng Ngouana, has confirmed that, while it is the norm for the IMF to close its local office when its programme with a country ends, the decision to maintain the Jamaica office for an additional two years speaks to the strength of the fund’s relationship with the country.

Dr Ngouana indicated that the partnership between Jamaica and the IMF will continue, adding that the IMF will provide technical support for institutional and capacity-building in key ministries, departments and agencies through training, among other inputs.

The IMF’s team led, as usual by Uma Ramakrishnan, visited Jamaica between September 9 and yesterday (September 19) to conduct discussions on the final review.

The statement noted that:

“Budget discipline combined with a reorientation of the fiscal system, including the shift from direct to indirect taxes pioneered by this Government, has helped put public debt on a sustained downward path. Proactive liability management — as evidenced by the latest successful swap of existing bonds at relatively low yield — has also helped Jamaica maintain the path towards reducing debt to 60 per cent of gross domestic product (GDP) by 2025/26, in line with the provisions of the Fiscal Responsibility Law.”

It said that significant efforts have been made to build monetary institutions and improve the workings of the foreign exchange market. These steps have put the Bank of Jamaica firmly on a path towards operational independence, within an inflation targeting framework that conforms with international best practice.

“Nonetheless, to fully achieve Jamaica’s considerable potential will require renewed attention to supply side reforms to address crime, support agricultural resilience, and invest in education and health care. The government is also committed to expanding social assistance for those in need through better coverage of the Programme of Advancement Through Health and Education (PATH) and support for the elderly,” the fund said.

The fund cautioned that to make these reforms a reality will require the freeing-up of fiscal resources through a meaningful transformation of the public sector that prioritizes government functions and redesigns public sector compensation.

“This will necessarily entail the Jamaican society confronting tough choices, the resolution of which will require broad social consensus. More also needs to be done to build public trust in the governance of public institutions,” it pointed out.

Broad-based ownership across stakeholders and the continued commitment to public accountability through the Economic Programme Oversight Committee, have been hallmarks of Jamaica’s approach to economic reform, the statement added.