Thu | Jun 4, 2020

Jamaica has achieved external sustainability, declares finance minister as he emphasises importance of healthy NIR

Published:Sunday | December 8, 2019 | 12:00 AMAlbert Ferguson /Gleaner Writer
Finance Minister Dr Nigel Clarke

WESTERN BUREAU: Jamaica's finance minister says the country's healthy net international reserves (NIR), at nearly US$3.2 billion, has enabled for the timely servicing of debts.

Finance Minister Dr Nigel Clarke explained that Jamaica has now achieved external sustainability, which means the country is now in a position today to pay and service its external obligations as they become due.

This external sustainability, he argued, is one that we have not been able to achieve for a long time.

He warned that this would be compromised should the central bank use the NIR to stem the unpredictable movement of the exchange rate. 

“There are some who would want the reserves to be used to ensure that the exchange rate doesn’t move [but] that would be a misuse of your reserves and that would be inimical to your interest," Clarke said.

He was speaking yesterday at the third staging of the annual Mayor’s Charity Ball held at the S Hotel Jamaica Convention and Events Place, hosted by Montego Bay’s Mayor Councillor Homer Davis, to provide special Christmas gifts to needy children and the elderly in Montego Bay.

“And the fastest way to lose external sustainability is to misuse the reserves in your central bank,” Clarke told the gathering of business leaders, security experts and politicians at the event.

“As business people without external sustainability your ability to conduct business as you know it today would be compromised,” he cautioned.  

The finance minister's caution has come amid criticisms from some business leaders in the second city who called for the Bank of Jamaica to use the NIR to stem the rapid devaluation of the Jamaican currency. On November 1, the benchmark US$ traded at J$140.42 to US$1.

“A more moderate exchange rate system is best for all our businesses’ predictability and will only be balanced by the BOJ’s decision to intervene with the use of the reserve and/or the use of other macro-monetary measures,” Janet Silvera, president of the Montego Bay Chamber of Industry and Commerce, said at the time.

Meanwhile, Clarke said Jamaica's economic gains are being noticed globally, as evident when the Jamaican flag was recently flown over the New York Stock Exchange building in the United States (US), saluting the pole performance of the country’s stock market.

“Jamaica is being known around the world today for its economy and that is a very powerful thing. We have been embarking on the policies and procedures to ensure that continue for a long time,’ he advised.