IMF confident Jamaica sticking with debt-reduction strategy
The International Monetary Fund (IMF) has said it is confident that Jamaica remains committed to an agreed debt-reduction strategy despite last week's admission by local officials that the public debt has increased by two percentage points to 122 per cent of gross domestic product (GDP) since the start of fiscal year 2016-17 last April.
"The Government has been seeking opportunities of reprofiling the debt, meaning you essentially raise funds to prefinance what's coming because you have uncertainty on the cost of financing going forward," said Constant Lonkeng Ngouana, the IMF's resident representative to Jamaica.
"Of course!" he told The Gleaner when asked if he was confident the country was sticking to its debt-reduction plan agreed to under a four-year deal signed in 2013 that was replaced last November by a three-year precautionary standby loan agreement.
Jamaica's high level of debt had crippled the country's ability to raise funds on the international capital markets. The situation had worsened after a 2010 deal was cancelled because of Jamaica's failure to meet targets.
"The calibration of the pace of fiscal adjustment is based on the Jamaican fiscal responsibility law which targets debt-to-GDP ratio of 60 per cent by 2025-2026, so any calibration of the macroeconomic framework is informed by that target. In that sense, the macroeconomic framework is fully consistent with that," added the IMF representative.
Speaking after the disclosure by finance ministry officials at last week's meeting of Parliament's Public Administration and Appropriations Committee, state minister in the ministry, Fayval Williams, said the debt should return to its downward path in the upcoming 2017-2018 fiscal year, which starts on April 1.
Dennis Chung, chief executive officer of the Private Sector Organisation of Jamaica, has said the explanation was "reasonable". "If we're looking at long-term management of the debt, then as opportunities arise, you might want to take advantage."
Darlene Morrison, deputy financial secretary, Economic Management Division, also said that the foreign exchange rate over the past year had "a great impact" on the debt, which was near 150 per cent of GDP in March 2013.