Wed | Aug 16, 2017

Government should decide soon on another IMF programme

Published:Wednesday | July 6, 2016 | 7:00 AMMcPherse Thompson
Dr Bert van Selm (left), outgoing International Monetary Fund resident representative, with Richard Byles, co-chairman of the Economic Programme Oversight Committee, which has been monitoring the four-year extended fund facility with Jamaica.

Outgoing International Monetary Fund (IMF) resident representative, Dr Bert van Selm, believes the Jamaican Government should determine as soon as possible whether it wishes to negotiate another arrangement with the Fund to replace the current extended fund facility, which comes to an end in April 2017.

He said that when he meets people, a lot of them "are thinking about what happens after the current arrangement, and that's not just the Government but also the private sector and civil society".

Emphasising that "it's clearly a question on people's minds", Dr van Selm, in an interview with Wednesday Business at The Gleaner's North Street, Kingston, offices yesterday, said, "Given that people are already discussing it, I think it's good to start sooner than later."

In March this year, co-chairman of the Economic Programme Oversight Committee, Richard Byles, said that while he was bullish about Jamaica's future, his confidence would be boosted if the Government publicly discloses, this year, its intention to negotiate another programme with the IMF.

He said that Jamaica has done well in the past three and a half years because of the strict IMF programme negotiated by the People's National Party administration, and which began in May 2013.

"What the IMF programme has done is hold our feet to the fire and make sure that we did all of the right things, because it is so easy to not do the right things and do the popular things," said Byles.

The resident representative, who began his tour of duty in Jamaica in July 2013, said, "It's good to start thinking about that relatively early."

 

BEST FORM OF ENGAGEMENT

 

Dr van Selm noted that the IMF has several different options and modalities. "So that's something that at some point we need to discuss with the Government of Jamaica - what are their wishes, what are the main things they want to get out of their relationship with the IMF, and building on what is the best form of engagement."

An IMF team is due in Jamaica in August to undertake the 13th review and could raise the issue about what comes after the end of the current four-year economic support programme, he said.

"I think Jamaica has been able to make tremendous progress over these three years in improving macroeconomic stability. We've been able to support them - the Government - in co-operation with the IFIs (international financial institutions), the private sector, civil society. It's great if you feel like you can make a contribution that's heading in the right direction. That's very rewarding professionally," van Selm said.

However, he said there are other areas where a lot of work needs to be done, among them public sector and pension reform, whether under another IMF programme or not.

 

BREXIT IMPACT

 

Asked about the likely impact on the Jamaican economy of Britain's decision to exit the European Union, Dr van Selm said, "The impact on the British economy is likely to be negative. You see that already last week. And, of course, Britain is an important economic partner for Jamaica in terms of tourism flows, remittance flows. So we do expect to see some negative impact from that on the Jamaican economy."

He added that, "To the extent that Brexit puts a brake on global growth, you can expect to see lower global oil prices. Lower global growth doesn't help Jamaica, but lower oil prices do help Jamaica."

Dr van Selm, who will be returning to a post at IMF headquarters in Washington, DC, will be replaced by Constant Lonkeng as the IMF resident representative in Jamaica later this month.

He said Lonkeng is an experienced economist who has worked on the Jamaica team for two and a half years until February this year. "That means that he knows the economic situation of the country very well, what problems the country faces, what challenges there are, and I'm convinced he's going to make a running start."

Lonkeng is expected to arrive in Jamaica in time to prepare for the 13th review in August.

mcpherse.thompson@gleanerjm.com