Jamaica, Grenada and St Kitts are exemplary regional models — LagardeFriday, November 17, 2017
BY KARENA BENNETT
Managing Director of the International Monetary Fund (IMF), Christine Lagarde has singled out Grenada, St Kitts and Jamaica as exemplary countries for the region having successfully implemented reforms to bring down debt levels.
Lagarde, who was delivering in the opening address of the 2017 High-Level Caribbean Forum at the Jamaica Pegasus Hotel in Kingston on Thursday, reasoned that while many had questioned whether oversight by the IMF would be of benefit to th country, they have been proven wrong after both Governments held firm on its promise to conetinue reforms under the programme.
By 2012 Jamaica had accumulated debt equal to 145 per cent of GDP. To stabilise the economy, reduce debt and fuel growth, the Government has begun implementation of an ambitious reform programme which has garnered national and international support.
As part of a comprehensive package, the World Bank and the Inter-American Development Bank each agreed to provide US$510 million between April 2013 and March 2017, while the International Monetary Fund committed a US$932 million funding programme through its Extended Fund Facility covering the same four-year period.
At the end of 2016, the IMF approved a three-year US$1.64 billion programme under the Stand-By Arrangement as a follow-up to the now concluded EFF.
With the institutional reforms and efforts to improve the investment climate starting to bear fruit, the country's credit rating has improved and Jamaican bonds trade at a premium in international markets.
Total government debt fell to 121 per cent of GDP by the end of 2016. According to minister of Finance Audley Shaw that rate now stands at 115 per cent and should fall to 108 per cent by the end of the fiscal year.
Meanwhile, the country's GDP rose by 1.4 per cent in 2016 and similar growth is expected in 2017.
“I think the courage of the authorities of Jamaica and one after the other and the inclusive approach taken by EPOC have been critically important to ensure that the programme is owned, adopted and implemented to the benefit of the Jamaican people,” she told the audience.
The two day event was staged by the IMF and the Jamaican Government and ends today.
She noted that too often, promising reforms have been cut short from policies driven by political pressure and that stronger institutions and fiscal frameworks can help safeguard prudent fiscal policies, especially as climate change is expected to intensify the impact of natural disasters and worsen the vulnerability of small states in the Caribbean.
It on this premise that Lagarde is proposing the convening of a special event with all the major private and public stakeholders to explore options for building resilience in the region, that include risk mitigation and debt management strategies.
“We want to do it with the Caribbean authorities and the people and to corporate with all international funding organisations that are willing as we care for not the short term fix, not plugging the hole but thinking about how we can build prevention, precaution, defenses going forward in order to anticipate what is bound to happen again and perhaps with more veracity than it has,” IMF's managing director reasoned.
The special event, she said, will include the World Bank, the Caribbean Development Bank of the Caribbean, Inter American Development Bank and other development partners.
SLOW GROWTH IS A PUZZLE
According to Lagarde, while some authorities in the region have made effort in terms of macroeconomic stability, growth is somehow resisting those efforts.
“It's a bit of a puzzle as to why that is. The Caribbean has not been able to insulate itself from shocks of natural disaster because of growth imbalance, the high cost of electricity.
“We need to create a virtuous instead of a vicious cycle, where strong growth could reduce high unemployment, particularly youth unemployment and crime which will lead to improving productivity, and improve business environment without which investors are reluctant to invest,” Lagarde continued.
Prime Minister Andrew Holness in accepting Lagarde's proposal, said it is important that leaders bring critical stakeholders to the table to have the discussion as this will lead to them taking the discussion to the populous.
“The populous will vote to make these good policies apart of the political economy ...so that gains that are made by one administration are not eroded when there is an election,” he said.
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