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Minister of Finance and the Public Service, Audley Shaw, has said that the Government is maintaining strict fiscal prudence, given the global economic crisis that has led to a credit crunch on the international market.
“Given the limitation of global financing, it is important for us to strive to maintain our deficit target, and despite the pressures for additional expenditure to meet hurricane damage and public sector wage adjustments, we continue to exercise strict fiscal controls,” Minister Shaw said, while addressing a public forum yesterday (Dec. 3), at the Northern Caribbean University (NCU) in Mandeville, Manchester.
“I am pleased to report that up to the end of October, our projected fiscal deficit remained on target, even as we know that the rest of the financial year will be challenging,” he stated.
In the meantime, Minister Shaw said that the Government’s move to source cheap money, long before the financial crisis, is now paying off, as the multilateral institutions “have given us access to hundreds of millions of foreign exchange flows, which has proven to be vital in the face of the global financial crisis”.
“Some of this funding will replace the flows we would have hoped to access from the private capital market, which is now closed to most emerging markets. The Government is serious about accessing cheap resources in order to facilitate growth and development of the economy, and it is working,” he stated.
He indicated that the Government has secured some US$300 million from the multilateral developments banks and “I will sign an additional three policy-based loans with the Inter-American Development Bank (IBD) for a total of US$ 101 million. By February 2009, significant additional flows are expected from the World Bank and the Caribbean Development Bank, which when combined with a possible US$300 million liquidity support programme for commercial banks, will see a total inflow of approximately US$950 million by the end of this fiscal year.”
According to Minister Shaw, “the loans represent an unprecedented level of inflow of foreign exchange loans at low interest rates and is due to the aggressive policy of re-engagement with the multilaterals”.
“Significantly, increasing access to financing from the multi-laterals makes sense since their lending rates are considerably lower and more stable than the commercial markets. The challenge, since the loans from these agencies are largely policy-based loans, is to harmonise our domestic policies especially dealing with fiscal and administrative reform, with the lending policies of these agencies. This is not a difficult exercise because there is a convergence of policies given this Government’s commitment to good governance,” Minister Shaw stated.