IMF Support Important Efforts to Re-Engage Multilaterals


Minister of Finance and the Public Service, Audley Shaw, has said that the importance of Jamaica’s relationship with the International Monetary Fund (IMF) cannot be understated, as it forms a part of Jamaica’s programme of re-engaging the multilateral organisations.
Minister Shaw made the statement in a release yesterday (Dec. 10), following meetings with Managing Director of the IMF, Dominique Strauss-Khan and his team.
“Many of you may not be aware of this, but the IMF’s support of Jamaica’s programmes, as it relates to our policy or development-based loans, is very often solicited if not required before our multilateral development bank partners will disburse the funds. I am happy to report that we have received unequivocal support to date from the IMF on our programmes,” he said.
The Minister emphasised that the programmes being implemented “are our own programmes designed by our technocrats. These are not programmes that are being dictated to us by any institution. From day one in office, you have heard me outline to you the five pillars that we believe will be critical for economic development,” he said.
The three pillars are: a strong, disciplined approach to fiscal and debt management; reform of the tax system to improve efficiency and to create a business friendly environment, starting with administrative changes and consolidation of statutory deductions; reduction of bureaucracy, corruption and waste; promotion of local and foreign direct investment above present levels; and urgent implementation of the energy policy, including energy conservation and investment in alternative energy.
Mr. Shaw said that the first three pillars form the basis of the policy-based loans that have been negotiated. “Since September last year to present, I have signed loans to the tune of some US$400 million. Many said obtaining concessionary loans from the multilaterals was an almost impossible feat. I believe the record shows that I have proved otherwise,” he noted.
The categorisation of Jamaica as a middle income country has placed constraints on the level of grant funding and concessionary loans that the country can receive. However, the Minister explained that the country’s heavy debt burden has been an impediment to the amount of resources that can be allocated to vital needs, such as education, health care and national security.
“In this regard, we have lobbied and continue to lobby to have countries like Jamaica placed in a special category .Small, Vulnerable and Heavily Indebted Middle Income Countries. The Prime Minister raised this concern at the United Nations Assembly recently and it will be further discussed when Caribbean Finance Ministers meet in Barbados in January,” the Minister disclosed.
Outlining the measures that the Government has been pursuing to mitigate the effects of the global economic crisis, Mr. Shaw said that with respect to monetary policy, there has been significant Central Bank intervention in the foreign exchange market, increased interest rates and increased cash reserve requirement. With respect to fiscal policy, the Minister pointed to the cut back in expenditure, which will be reflected in the Supplementary Estimates now before Cabinet, enhanced efforts to collect outstanding revenue, and accessing of multilateral loans.
“It is our expectation that as confidence returns to the market and speculation decreases, the monetary policy outlined will be short-lived. This is especially important as, if prolonged, it could have a negative effect on the productive sector,” he stated.
With respect to the sourcing of multilateral loans, the Minister explained that the policy-based loans in support of the Government’s programmes are critical for good governance, which is the foundation for a vibrant and competitive economy.
“The Government has embarked on a set of major reforms aimed at achieving higher economic growth, with fiscal sustainability and debt reduction at the cornerstone of the reform agenda. The Government remains committed to transforming the pubic sector into a business-friendly unit, while laying the economic foundation to achieve sustainable growth and development in the economy. We want to position ourselves now, to benefit from the upturn in the economy in 2010 by IMF projections,” Minister Shaw stated.

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