IMF Least Painful Option for Jamaica- Charles Ross

Managing Director of Sterling Asset Management, Charles Ross, has said that borrowing from the International Monetary Fund (IMF), is the least painful option for Jamaica at this time.
Mr. Ross, who was addressing the weekly meeting of the Rotary Club of Mandeville yesterday (Sept. 15) at the Golf View Hotel in Manchester, noted that a number of countries in the region have embarked on, and have successfully completed IMF programmes, which have placed their economies in healthier positions.
“A great deal has been said about the harsh terms and conditionalities, which often accompany IMF loan programmes. Trinidad, Barbados, Belize, Dominican Republic, Grenada and Guyana, are countries right here in the Caribbean that have completed successful borrowing programmes with the IMF,” he informed.
He stated these countries were able to go through the adjustment because of carefully thought-out plans.
“These countries succeeded because they approached the IMF with economic adjustment programmes to which they were fully committed, and which they implemented conscientiously once the IMF loans were disbursed. There is no reason why Jamaica cannot now do likewise,” he argued.
According to Mr. Ross, opponents of IMF borrowing often neglect to mention that the adjustments, which the Fund may ask for, will have to be made whether or not the country takes the loan, as there are imbalances in the economy that “must be brought into equilibrium in such a way that the economy will begin to grow in a strong and sustainable way”.
“Borrowing from the IMF will allow us to make these adjustments over a longer period of time, and in a gradual way than would be the case if we did not have access to these resources. Taking an IMF loan will make the adjustment much less painful than it would be if we were to attempt to go it alone,” he pointed out.
He noted, however, that it is imperative that the funds received are put to the “best possible use”.
“We could consider using the IMF money to cover the cost of repaying the principal on Government’s foreign debt as the amortisation payments fall due. This would substitute lower cost multi-lateral debt for higher cost private commercial debt, thus lowering the interest cost of our foreign debt without increasing the overall stock of our debt,” Mr. Ross outlined.