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IMF less optimistic than gov't about Jamaica's growth levels

IMF's Uma Ramakrishnan and Prime Minister Andrew Holness
 
The International Monetary Fund (IMF) has signalled it is not as optimistic as local authorities about the level of growth Jamaica can achieve in the short term.
 
The Fund's projection was released during a news conference on Friday, marking the end of a staff level visit for the Fourth Review under Jamaica's Stand-by Arrangement.
 
The IMF is predicting economic growth will reach 1.4 per cent for this financial year, supported by mining and construction.
 
The IMF said it is expected to further increase to around two per cent over the medium-term.
 
Uma Ramakrishnan, head of the IMF mission team, stressed that public sector reform will be important in ensuring growth. 
 
"Sustainably reducing the private sector wage bill is important to channel savings towards social and growth-enhancing spending," she argued, adding that it is important Jamaica leverage the current window from the four year wage agreement to help prioritise government functions and institute a new compensation framework for public sector employees.  
 
The Fund's growth projection is more conservative than that of the Planning Institute of Jamaica (PIOJ), which has said growth is expected to be between two and three per cent for this fiscal year.
 
The Government is also still maintaining its projection for five per cent growth by the 2020/2021 fiscal year.
 
Favourable economic conditions 
 
The IMF has said the private sector now has an unprecedented opportunity to expand domestic investment, generate economic opportunities, and become the growth engine for Jamaica.
 
It said this is based on the strong economic fundamentals and sustained policy implementation of the authorities' reform programme.
 
Prime Minister Minister Andrew Holness, who was also at Friday's media briefing, urged the private sector to take advantage of the improving economic climate. 
 
"With interest rates at record low levels, it begs the question, why isn't there more economic activity, more risk taking, more investments from the private sector?" 
 
In the meantime, the IMF team said all quantitative performance criteria for the period ending in June were met and structural reforms are on track. 
 
The IMF added that it is important for the Bank of Jamaica (BOJ) to continue improving monetary policy signalling and limiting foreign exchange interventions to episodes of disorderly market conditions. 
 
The government is moving to table legislation that amends the Bank of Jamaica Act to anchor monetary policy on price stability. 
 
Preparation for new fiscal year 
 
Meanwhile, the Holness administration is in preparation mode for the 2019/2020 fiscal year.
 
Cabinet on Thursday completed three days of deliberations as it prepares for the next budget.  
 
It discussed, among other things, the Macro-Economic Profile for 2018/2019 and projections for 2019/2020.
 
The Cabinet is expected to convene another series of consultations soon, to refine aspects of the overall Planning and Budgeting Framework for 2019/2020.  
 


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