Lowering debt, establishing durable growth critical to Jamaica’s recovery – IMF

Martijn made the statement following news on Wednesday that the IMF approved Jamaica’s application for a four-year extended fund facility, worth US$958 million.

KINGSTON, Jamaica, Thursday May 2, 2013 - The mission chief for the International Monetary Fund (IMF) in Jamaican Jan Kees Martijn believes the country’s economic future is hinged on the resolve of the authorities and other stakeholders to adjust policies to lower debt to a sustainable level and establish the conditions for durable growth.

Martijn made the statement following news on Wednesday that the IMF approved Jamaica’s application for a four-year extended fund facility, worth US$958 million.

“The authorities’ program provides a realistic roadmap to achieve these goals. In this context, I am encouraged to see the creation of a broad-based, private sector-driven committee to provide oversight of policy implementation.

The Fund is a supporting partner in the authorities’ efforts to address their long-standing structural challenges. We will work closely with the Jamaican authorities, as well as with its domestic and foreign partners, over the four-year program period to help maintain the reform momentum and strengthen the program over time,” said Martijn.

The IMF Mission chief said the Portia Simpson Miller led administration is making an effort to address the challenges of low growth, high debt and diminishing competitiveness.

“The government has taken time during its first year in office to review the challenges facing the country and has designed its own medium-term program, which bodes well for successful implementation. Actually, the implementation of the reform package is off to a promising start. All prior actions under the IMF program have been implemented, and several other key actions have been taken. In particular, the new budget for 2013/14 is in line with the program objective of raising the primary surplus of the central government to 7.5 percent of GDP—an ambitious but essential target.”

He noted that there is widespread recognition of the need for change in Jamaica and a strong communication strategy for all parties who are involved in overseeing program implementation will be extremely important.

“There will be difficult moments, and it will be important to ensure that everyone understands the purpose of the steps that are to be taken,” he added

The Portia Simspon Miller administration, which took office in January 2012, has attained an improvement in the central government’s primary surplus for the fiscal year 2012/13 to 5.2 percent of gross domestic product (GDP) from 3.2 per cent the previous year.

According to the IMF’s latest assessment of Jamaica’s economy, the ratio of government debt to GDP hovered at around 140 percent last year; Jamaica has also grappled with a drop in international reserves and a sharp slide in the Jamaican dollar.

“The main objective of the program is to put public debt on a firmly downward trajectory and thereby create a virtuous cycle of debt sustainability and higher economic growth,” David Lipton, the IMF’s first deputy managing director, said in a statement.

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