Imf Agreement With Jamaica
“A sustainable reduction in the public sector wage bill is important to steer savings towards social and growth-enhancing investments. It is important to move forward with this difficult but critical reform. The use of the current period of the quadrennial collective agreement will help to prioritize government functions and establish a new compensation framework for public servants. “The Jamaican authorities have shown an exemplary commitment to reform under two successive IMF-supported programmes that have lasted the past six and a half years. Difficult reforms have been implemented – with considerable sacrifices for the Jamaican people – that have institutionalized fiscal discipline and led to a considerable reduction in public debt, which is now on track to reach the legal target of 60% of GDP by March 2026. The unemployment rate is at a historically low level, inflation is tempered, the financial system is less fragile and international reserves are comfortable. “Strong economic fundamentals and sustained political implementation of the government reform agenda provide the private sector with an unprecedented opportunity to increase domestic investment, create economic opportunities and become Jamaica`s growth engine. The Prime Minister expressed confidence that the government “with the IMF, which is now coming out of the room,” can maintain the fiscal discipline that the country has committed to over the past decade. “The IMF team has reached a preliminary agreement with the Jamaican authorities on a series of measures to complete the fifth review under the SBA. The IMF Board of Directors` review is scheduled for April 2019. Upon approval, an additional SDR 160.8 million (approximately $224 million) will be made available to Jamaica, for a total of $1.4 billion. The Jamaican authorities continue to view the SBA as a precautionary measure.
Public opinion said, “Enough is enough.” The Economic Program Exchange Committee was created to allow stakeholders from the private sector, unions, government, science and the media to come together to hold the government to account for their reform commitments and budgetary discipline under the reform agenda. Thus, said Finance Minister Nigel Clarke, “what started as an IMF program, with imf support, has become Jamaica`s program.” “The accommodative monetary policy stance of the Bank of Jamaica and ongoing efforts to support systemic liquidity and ensure financial stability remain appropriate. Exchange rate flexibility should continue to act as a buffer, with currency interventions limited to limiting excessive volatility. The combination of a commitment to reform from all walks of life – the political, public and private sectors, and strong support for international and bilateral partners – has given Jamaica a historic opportunity to move from an unsustainable policy to an example for other small countries of how to deal with a crisis and turn it into an opportunity. Given that the financial commitment will end with the IMF at the end of this year, such a commitment, as well as the establishment of the institutions necessary for the continuity of Jamaica`s policy, should be maintained in a good position for more sustained economic growth. “By improving the dynamism of public debt, staff are supporting the reduction of the primary surplus target from 1/2% of GDP to 61.2% in the budget for FY20, in order to further stimulate growth and job creation.