Prime Minister, the Hon. Bruce Golding, has said that the pending International Monetary Fund (IMF) agreement, will not be a panacea for Jamaica’s economic problems.
Giving the main address at the 10th anniversary celebrations of Mega Mart Stores, held at Catherine Hall, Montego Bay, St. James, on December 12, Mr. Golding explained that there is at present a shortfall in Government revenues, which cannot be covered by the IMF loan agreement.
“When the IMF agreement is concluded, there are some people who make the mistake of believing that this is some panacea, that this will solve the problem, that there will be a lot of money flowing in. We are seeking to get US$1.2 billion, and it is not a panacea. That US$1.2 billion is going to stop at the Bank of Jamaica, not one penny of that is going to go to the Ministry of Finance, that’s the nature of IMF arrangements,” the Prime Minister said, pointing out that the money cannot be used for budgetary support, it is for balance of payment support.
Prime Minister, the Hon. Bruce Golding (second left), with Chairman of the Sandals Group, Mr. Gordon ‘Butch’ Stewart (left); Chairman and Chief Executive Officer of Mega Mart Wholesale Club, Mr. Gassan Azan, (second right), and Minister of Industry, Investment and Commerce, Hon. Karl Samuda (right), at the 10th Anniversary celebrations of Mega Mart Stores, at Catherine Hall, Montego Bay, St. James, on December 12.
He argued that the IMF support is critical to the day-to-day operations within the country, as it is filling the gap that has been left by the shortfall in foreign exchange earnings being experienced by the country.
“Those funds are being provided to enable us to pay for the oil that we import, to pay for the medicines that we import, to pay for the raw materials that our manufacturers need, because the funds that we normally use to pay for those things are no longer flowing in the way that they used to flow,” he noted.
The Prime Minister identified Bauxite and Remittances as areas in which the country has lost over US$800 million in foreign exchange inflows.
Turning to the revenue side of the economy, Mr. Golding pointed out that the IMF loan will not be replacing any losses incurred, and that the problems presented by revenue shortages will have to be dealt with through measures put forward by the Government.
Prime Minister, the Hon. Bruce Golding (second right), is greeted by a member of staff of Mega Mart Wholesale Store, as he tours the establishment, which is located in Catherine Hall, Montego Bay, St. James, on December 12. Occasion was the 10th Anniversary celebrations of the store.
He outlined that despite efforts by the Government to cut its expenditure by approximately $7 billion, Government revenues at the end of October were running at some $18 billion below projections. This, he said, worked out at an average of approximately $2.5 billion per month within the fiscal year.
“We have sought to address this problem by tightening up on expenditure,” he said, adding that there have been numerous appeals for funds, to which the Government has not been able to respond because of the revenue shortfall.
He pointed out that the IMF is insistent that the country must show its ability to deal with its revenue problems before the loan agreement is signed.
Prime Minister, the Hon. Bruce Golding (right), examines an item as he tours the Mega Mart Wholesale Store, located in Catherine Hall, Montego Bay, St. James, on December 12. Occasion was the 10th Anniversary celebrations of the store. To the Prime Minister’s right is Chairman of Mega mart, Mr. Gassan Azan
The Prime Minister said the delay in signing the IMF agreement is due mainly to two factors, “the effort that we have had to make, the work that we have had to do to configure a programme that satisfies that particular requirement; and secondly, the care that we have had to take to make sure that we are not signing an agreement simply to satisfy IMF conditionalities. We must be looking at what is necessary to put our house in order.”
Mr. Golding emphasised that unless the country’s housekeeping is put in order, there will not be any possibility of an economic environment to encourage investments.