‘Right Valuation’ Has Made Jamaica More Competitive – Lagarde
By: , July 1, 2014The Key Point:
The Facts
- She noted that foreign direct investments have increased by 15 per cent and more manufacturers are looking to move their businesses to Jamaica.
- Ms. Lagarde said right-valuation has to do with determining the right currency level on the basis of production factors, inflation deferential, and competitiveness factors.
The Full Story
Jamaica is reaping positive results from the exchange rate adjustment.
Managing Director, International Monetary Fund (IMF), Christine Lagarde, says the current exchange rate has made the country more competitive internationally. She noted that foreign direct investments have increased by 15 per cent and more manufacturers are looking to move their businesses to Jamaica.
The IMF Managing Director was speaking to journalists at Jamaica House on Friday, June 27, where she addressed the so-called devaluation of the Jamaican dollar.
“I don’t like to use the word devaluation. I prefer to use the word ‘right-valuation’, because it may well be down the road, as the programme progresses, as growth picks up, and as the reserves build up, that it will not be devaluation forever and it might revaluate,” she stated.
Ms. Lagarde said right-valuation has to do with determining the right currency level on the basis of production factors, inflation deferential, and competitiveness factors.
“By virtue of that right-valuation… you are improving the competitiveness of Jamaica… because the competitiveness factors are becoming attractive relative to other places. So it’s hard for a period of time, but it’s driving in the direction of growth, better competitiveness, investments, jobs – that’s the logic behind it,” the IMF Managing Director remarked.
She said it is therefore important that, as the country goes through this economic reform process, that social safety nets are provided for vulnerable households.
“The fact that PATH (Programme of Advancement through Health and Education) was increased by 15 per cent for all and by 67 per cent for the most senior in the population is clearly an indication of that needed protection and one that the IMF endorses,” she stated.
The IMF Managing Director was in Jamaica for a three-day visit from June 26 to 28, where she met with Prime Minister, the Most Hon. Portia Simpson Miller; Finance and Planning Minister, Dr. the Hon. Peter Phillips, and other senior Government officials.