JIS News

Senior International Monetary Fund (IMF) Resident Representative in Jamaica, Dr. Gene Leon, said that the appreciation of the Jamaican dollar offers significant long- term benefits for business interests, Government and the country on the whole.
Speaking at the Jamaica Exporters’ Association (JEA) Breakfast Forum on Wednesday (Aug. 11) at the Jamaica Pegasus Hotel, New Kingston, Dr. Leon cited concerns by private sector stakeholders, who point to the negative effect the appreciation will have on their business.
Having devalued from $70 in 2008 to $90 up to the first quarter of 2010, the Jamaican dollar started to appreciate in April, and currently trades for about $86 to the United States (US) currency.
Dr. Leon said that some interests are “crying foul as to how much they were hurting because the exchange rate had moved down $4.”
“I agree that if I was getting $90 for every US dollar, and I’m now getting $8(6). your profits are likely to be hurt, initially. Your decisions on production are likely to take a beating. But that’s a production implication of a movement in the nominal exchange rate. What about imports? Imports are going to cost less. So your inputs, if you are getting them from outside, will cost less,” he argued.
He further pointed to the “balance sheet effect,” contending that interests and entities, including the Government, who have external financial obligations to meet in foreign exchange, would require less local currency to settle commitments.
“That’s a plus, (because) that now helps in terms of providing a little more room for the Government.to be able to do some other things. What if the banks have borrowed (from) overseas…they have to pay back. They are probably thinking this appreciation is a good thing,” he said.
In addition, he said, the inflationary pressure is likely to be reduced, which will benefit workers, as their purchasing power is maintained more because prices are not moving as fast. “The bottom line of all of this is you have to take a broader view.at (the) external stability. driving.the country’s position versus the rest of the world,” the IMF official stated.
In this regard, Dr. Leon stressed the need for collaboration among private and public sector stakeholders and expressed the hope that the provisions of the 27-month US$2.4 billion Standby Agreement, which the Government negotiated with the IMF, can bring the various elements together in a way to address “at least in the short-term, the imbalance that you have, and lay the foundation for stronger growth going forward.”

Skip to content