Economic and Structural Reforms Must be Expedited – PM

Photo: Yhomo Hutchinson Prime Minister, the Most Hon. Andrew Holness (2nd left), addresses journalists during the Government of Jamaica (GOJ)/International Monetary Fund (IMF) joint press conference for the country’s second review under the three-year IMF Precautionary Stand-by Arrangement. The press conference was held at the Office of the Prime Minister on Thursday, September 14. Others (from left) are Head of the IMF Mission to Jamaica, which conducted the review, Dr. Uma Ramakrishnan; Finance and the Public Service Minister, Hon. Audley Shaw; and Bank of Jamaica Governor, Brian Wynter.

Story Highlights

  • Prime Minister, the Most Hon. Andrew Holness, has underscored the need for the Government’s programme of economic and structural reforms, now under way, to be expedited.
  • This, he said, is imperative if Jamaica is to achieve economic independence and reduce its reliance on external assistance for funding support.
  • Noting that debt-servicing obligations and public-sector emoluments account for approximately 90 per cent of tax revenues generated, Mr. Holness said this leaves “precious little” to spend on hospitals, schools, parks, roads, courthouses and national security.

Prime Minister, the Most Hon. Andrew Holness, has underscored the need for the Government’s programme of economic and structural reforms, now under way, to be expedited.

This, he said, is imperative if Jamaica is to achieve economic independence and reduce its reliance on external assistance for funding support.

“We no longer have the luxury of delay,” he noted.

Mr. Holness was speaking at last Thursday’s (September 14) Government of Jamaica (GOJ)/International Monetary Fund (IMF) joint press conference at the Office of the Prime Minister for the second review under the three-year Precautionary Stand-by Arrangement (PSBA).

His remarks came against the background of comments by Head of the IMF Mission Team to Jamaica, which conducted the two-week review, Dr. Uma Ramakrishnan, who emphasised the need for the Administration’s reform agenda to be accelerated.

Noting that debt-servicing obligations and public-sector emoluments account for approximately 90 per cent of tax revenues generated, Mr. Holness said this leaves “precious little” to spend on hospitals, schools, parks, roads, courthouses and national security.

He said that achieving the targets requires greater investments over the medium-term in security and growth-inducing and poverty alleviation activities, pointing out that “the fiscal room that will make this possible will come from a rebalancing away from a budget consumed by (debt) interest (payments) and (public-sector) emoluments.”

“This is a voyage on which we are now embarked,” he said, noting that such an economic transformation will require the active participation of all stakeholders.

“We have invited the unions, civil society and private sector to participate in this process through various public-private bodies, such as the Partnership for a Prosperous Jamaica, the Economic Growth Council and Public Sector Transformation Oversight Committee. The Government I lead is, therefore (committed to that) partnership,” he pointed out.

Meanwhile, Mr. Holness said public-sector transformation will, among other things, be geared towards facilitating seamless start-up and growth of micro, small and medium-sized enterprises (MSMEs), which he emphasised “are the bedrock of our economy”.

This, he added, by making it easier for MSMEs to procure licences and permits, comply with regulations “and, most importantly, pay their taxes”.

Mr. Holness said the MSME sector is facilitating a significant percentage of the record job growth the country is currently experiencing.

Dr. Ramakrishnan, in her remarks at the press conference, emphasised that the attainment of greater public-sector efficiency is contingent on timely restructuring of the civil service, which “cannot be delayed much further”.

She said this, coupled with strengthening of the public procurement process, would result in timely execution of capital projects, among other notable outcomes.

Dr. Ramakrishnan said it imperative to accelerate the public-sector wage negotiations, noting that “further delays pose significant risks to the Government’s fiscal accounts”.

She noted that there is consensus between the Government and IMF about the need to anchor future wage negotiations on a “forward-looking” medium-term compensation framework that facilitates an equitable pay structure and system of allowances.

This, the Mission Chief added, in order to sustainably reduce the wage bill, thereby making more resources available for “much needed” social and growth-enhancing expenditure.

“We believe that a nine per cent target would allow the Government to move in that direction,” she said.

In his remarks, Finance and the Public Service Minister, Hon. Audley Shaw, reiterated that public-sector transformation is “a key ingredient, if we want to achieve significant rates of economic growth”.

He said the Government remains firmly committed to the task, which includes reducing the wage to gross domestic product ratio to nine per cent by the end of the 2018/19 fiscal year.

Jamaica met all quantitative targets and structural benchmarks and is assured of an additional US$180 million, if needed, subject to the IMF Executive Board’s approval.
This will increase the total funds that Jamaica can access to approximately US$790 million.

The PSBA review is the second since the arrangement came into effect in October 2016, replacing the four-year Extended Fund Facility.

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