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Minister of Finance and the Public Service, Hon Audley Shaw, has emphasised that although a new agreement with the International Monetary Fund (IMF) will not be without pain, every effort will be made to ensure that social and infrastructural programmes will be protected, even as the Government promotes a climate for good governance, increased investments and sustained development.
The Minister’s address was delivered by Technical Consultant to the Minister, Dr. Wayne Henry, at the inaugural Awards Banquet of the Cambio Association of Jamaica, held at the Terra Nova Hotel, in Kingston, on Saturday, August 15.
Mr. Shaw emphasised that with or without financial support from the IMF and other multilateral institutions, hard choices were necessary. “Choices that must underpin good governance; choices that make sense; choices that for too long have been sacrificed on the altar of avarice and expediency; choices that must be made in order to position the economy once and for all on the path of sustainable growth and development,” the Minister pointed out.
He observed that the country and its people have gone through several episodes of adjustment with little to show for the pain of those programmes. “Often after the medicine of adjustment, there is nothing to show for it but fatigue and frustration and the fear of greater pain…not to mention the mountain of expensive debt and emergence of a culture of slovenliness, waste and corruption. This time, let us ensure that after the pain of adjustment, there will be tangible and lasting gain for the country and its people,” the Minister said.
With respect to the impact of the international economic recession on the Jamaican economy, the Minister said that the crisis has served to underscore the country’s vulnerability to the external economic challenges. He explained that the country now faced the up-hill challenge of maintaining domestic stability, while restoring the conditions that can support recovery and sustainable growth into the medium-term.
The return to the IMF was therefore the only rational option, he noted. “Jamaica’s return to a borrowing relationship with the IMF must be seen as a positive development. Not only will the IMF agreement assist in stabilising external pressures but it will address the process of structural reforms in a fundamental and sustainable manner,” Mr. Shaw said.
He reflected that since taking office two years ago, the Government has focussed on ensuring: a sound predictable macro-economic policy framework; disciplined and strong fiscal management of the economy; a tax system that is simple and competitive; a modernised labour market geared toward high levels of productivity; a simplified business-friendly bureaucracy; effective measures to prevent corruption and fight crime; and supportive infrastructure.
“The global financial crisis must now give momentum to these efforts. If we can agree on a sustainable long-run fiscal path now, this could yield considerable economic benefits in the form of lower interest rates, debt reduction and increased consumer and business confidence over the medium term,” he said.
The Minister disclosed that the technical analysis by Government officials supported by the IMF staff in their Article IV discussions with Jamaica, stated that unless there was an influx of new capital, Jamaica’s ability to remain current on its international obligations will deteriorate sharply this year. Also, without the assurance that these resources offer, the improvement in investor confidence that was necessary to underpin a reduction in interest rates would not occur. “Maintaining order in the foreign exchange market and reducing borrowing costs are both crucial elements in building a stable environment that is friendly to investment, job creation and growth,” he said.
Minister Shaw gave the assurance of the Government’s continued commitment to the aggressive promotion and facilitation of increased private sector investment in agriculture and agro-processing, information technology industries, tourism, energy and the expansion of financial services, including the establishment of the international financial centre in downtown Kingston.
“The Government will also ensure that dedicated resources are provided for critical infrastructure projects, such as road building and maintenance, expansion of water supplies, the provision of affordable houses and housing solutions and the continued expansion of our ports,” Mr. Shaw explained.
The Minister thanked the major players in the financial services sector for their response to appeals to play their part in maintaining exchange rate stability. “The stability in the Jamaican economy in the past several months indicates the importance of co-operation in the face of severe resource constraints. In this regard, I must thank the Cambio Dealers’ Association for your spirit of co-operation in helping to stabilise the exchange rate,” he added.