Mon | Feb 17, 2020

Economic conditions will improve Wynter

Published:Friday | January 17, 2014 | 12:00 AM

Jamaicans may continue to face difficult economic conditions in the months ahead, but there is light at the end of the tunnel, Bank of Jamaica (BOJ) Governor, Brian Wynter assured manufacturers yesterday.

Addressing an economic forum organised by the Jamaica Manufacturers Association (JMA) yesterday at the Knutsford Court Hotel, New Kingston, Wynter said the country will end up with a higher level of Net International Reserves at the end of March and that will "allow us to look ahead."

Once that point is reached, "things should be relatively easier," he added.

As a result of greater stability and the reduction of debt ratios, the government should be better able to address social programmes, including education and the reduction of crime, Wynter said.

On Jamaica's economic indicators, he said "we got off to a very good start in January," but noted that it was a very "dynamic situation."

Wynter said the BOJ was continuing to try and keep interest rates at a measured level. But "it depends on you as much as it does on us," he said.

"I believe every day we are moving towards an environment that will make your lives a little easier," the Governor said, adding that without building the reserves there would not be much stability.

Jamaicans were all urging government to enter an agreement with the International Monetary Fund (IMF), but there is a need to recognise that being in an agreement with the IMF "is not the solution, its just a mechanism," he said.

One of Jamaica's aims is to reduce its debt to gross domestic product (GDP) ratio from the current nearly 150 per cent to below 100 per cent. But even that will not be enough, as Wynter said economic experts believe that a ratio of above 60 per cent "is a level that constrains your capacity to grow."

He said Jamaica should have met all criteria set out by the IMF for the quarter to December, but he cautioned, let's not celebrate yet."

Wynter side-stepped a question on bank charges, an area of concern to manufacturers. He said he would not answer the question as it was now "a subject that is firmly before Parliament," and that the BOJ had "sent information to Parliament earlier this week."

The cost of energy continue to be a problem for Jamaican manufacturers who have to pay up to US$0.42 per kilowatt hour.

However, businessman Andrew Mahfood said they could get lower rates on weekends.

Of concern to manufacturers also is the pending introduction of General Consumption Tax (GCT) on the importation of raw materials.

Mahfood said it was currently unknown how much GCT would be charged, but if additional GCT of five per cent is included the result would be catastrophic.