World Reps Says FRF Will Address Macroeconomic Issues


World Bank representatives have expressed confidence that Jamaica will be able to fix many of its macroeconomic problems, after the Fiscal Responsibility Framework (FRF) is fully implemented.
“If this Fiscal Responsibility Framework is implemented, it will transform the way public resources are spent and perhaps the large budget deficits will be behind us in Jamaica,” says World Bank Lead Economist and Sector Leader for Poverty Reduction and Economic Management for the Caribbean, Dr. Auguste Kouame.
Dr. Kouama, guest lecturer at the Mona School of Business, was making a presentation on the topic, ‘Jamaica and the World Bank’s Development Policy Loans: Transitioning from Global recession and High Debt to Economic Reform’, on Wednesday (September 22) at the University of the West Indies (UWI), Mona.
In January, 2009 the World Bank approved a $100 million Development Policy Loan (DPL) to Jamaica. Another US$200 million was approved in February, 2010, following the agreement on an International Monetary Fund (IMF) programme. These loans, as well as the help the Government is receiving from the World Bank, are expected to help Jamaica resume fiscal and debt sustainability.
The FRF, which includes two Bills already passed by the House of Representatives – the Financial Administration and Audit (Amendment) Act and the Public Bodies Management and Accountability (Amendment) Act, 2010 – are part of the thrust to improve the macro economy. “It needs to be fully implemented,” Dr. Kouame said of the FRF, but he acknowledged Government’s proactive approach to the matter saying, “it is a critical step that many governments around the world have not even taken yet.”
Commenting during the discussions which followed the lecture, Senior Economist at the World Bank, Zafer Mustafaoglu, said he expects that the FRF will be implemented in October, and agreed that it will lay the groundwork for improvements in Jamaica’s fiscal management.
Turning to Jamaica’s DPL, Mr. Mustafaoglu said disbursement of the next tranche of loans was also dependent on the success of the current DPL. He said the triggers were: implementation of the FRF; debt management reforms; improved public investment efficiency; and strengthening of tax administration.
Meanwhile, Dr. Kouame said the country has made “some progress” since embarking on the IMF programme, especially in terms of the reduction in interest rates paid by the Government.

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