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Governor of the Bank of Jamaica (BoJ), Hon. Derick Latibeaudiere, has emphasised that the fundamentals of the economy have not been deteriorating, despite the near-term challenges.
In fact, he said, most economic indicators are pointing “in the right direction,” to improve the economy, over the medium term.
“The exchange rate has remained relatively stable and we expect this stability to continue. The current account of balance of payments is projected to improve dramatically, from a deficit of 21 per cent to a deficit of 12 per cent in the financial year 2009/10. These are all positive signs for our economy,” he told today’s (August 12) quarterly press briefing, held at the Bank’s downtown Kingston offices.
The BoJ Governor was speaking against the background of what he said was the recent pre-mature downgrade of Jamaica’s credit rating by international rating agency, Standard and Poors (S&P).
He said the lowering of the country’s long-term foreign and domestic currency ratings from ‘B’ to CCC+ has added to the prevailing uncertainties, even though the rating was based on projections, not actuality.
“If you rate a country, then it has to be on something real, it can’t be on something expected, and a rating is so important that it’s very important that the rating agencies ensure that these elements are in place before you make a judgment. It goes all the way across the perception of Jamaica, both locally and abroad, so I believe that more due diligence could have been done in this instance,” he argued.
Mr. Latibeaudiere said that the Government has taken no decision on the set of options now before it, on which the S&P ratings were based. “The options were presented to the Government by a private institution and a specialist legal advisor was engaged to help in assessing the merit of these options. It was important to ensure that in coming to a decision, there would be no breach of contract that would lead to the unhinging of public trust. It is also important to be mindful of the binding nature of contractual obligations and the implications of establishing a precedent,” Mr. Latibeaudiere said.
He said the Government continues to maintain its resolve to honour all obligations, and the rating action therefore, was unwarranted.
Meanwhile, the Governor lauded the Government’s decision to return to a borrowing relationship with the International Monetary Fund (IMF). He described pending arrangement as “a positive effort to assist in stabilising external pressures and in addressing structural reforms in a sustainable way.”

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