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Passing IMF tests yield direct benefits – Phillips

Published:Wednesday | March 25, 2015 | 3:00 AMMcPherse Thompson
Minister of Finance and Planning Dr Peter Phillips (right) consults with Financial Secretary Devon Rowe during a meeting at The Gleaner’s North Street offices in downtown Kingston last Friday.

Finance and Planning Minister Dr Peter Phillips has rubbished claims that the International Monetary Fund's (IMF) endorsement of the Government's management of the economy, evident in the approval of quarterly performance targets, was inconsequential to the people.

"The end result is that the disciplines imposed by the IMF economic reform programme have had positive effects," he said.

"People say it is of no consequence to anyone. I disagree," said Phillips, during a forum at The Gleaner's North Street, Kingston offices, last Friday.

"First of all," he said, "it has helped restore Jamaica's credibility in the marketplace." Second, because of the lower interest rates, people who are now buying houses and getting loans at single digit rates, or persons borrowing for businesses and getting preferred borrower's rates in single digits, are direct beneficiaries.

direct beneficiaries

In addition, the people those businesses employ are direct beneficiaries of the IMF economic support programme, the finance minister said.

Phillips said "the 200,000 farmers who have found themselves earning and having access to a market, which is at the most buoyant it has been for domestically produced agriculture, are also direct beneficiaries."

He said the 5,000 or 6,000 people who have benefited from expanded business processing outsourcing operations because of the improved competitiveness of the Jamaican economy "are direct beneficiaries of the passing of the IMF tests".

Referring to the opening of the Hyatt Ziva hotel in Montego Bay last week, Phillips said workers there, as well as others in the tourism industry, "are also direct beneficiaries of the economic reform programme and the passing of tests".

Alluding to the Jamaican Government's four-year agreement with the IMF, the finance minister said "one of the fundamental understandings that we need, as a country, for the medium and longer term is that any claim to independence and to viability as an independent nation has to be predicated upon your ability to manage your own economic and financial affairs effectively".

global economic system

Apparently, referring to critics who suggested that the IMF was influencing the overall management of the economy, Phillips said any country that fails to manage its own affairs - as the Greeks are learning - will have somebody else manage it for them.

"The global economic system cannot permit, so to speak, people to write their own rules to operate. If you borrow without any prospect of being able to repay, then they close you out of the system. It's just a fact of life," the finance minister said.

"If you stop paying them, they will stop extending credit to you, they will stop investing in your economy because it means that you can't sustain that," he said.

"We have to accept that we have a debt, which is a high debt, and we have to pay that debt. We can argue, and I can argue as feelingly as anybody else about the injustices of a world economic system which is predicated on a lot of inequalities within and between countries," Phillips said.

"We can argue persuasively about inequalities in the world, but the fact of the matter is that as a small country, a threat not to pay, carries no threat to the international system (or) to the creditors," he said.

"So, what we have to do is face this particular obligation to manage our affairs," he added.

Last year, Phillips dismissed suggestions that Jamaica was at risk of default on its debt. He noted that the country has a programme of debt reduction supported by the IMF and was confident that Jamaica would continue to do well under that scheme.

mcpherse.thompson@gleanerjm.com