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Jackson says economy performing well in key areas

Published:Thursday | December 27, 2012 | 12:00 AM

Financial analyst John Jackson says key sectors of the economy are doing well although a deal with the International Monetary Fund (IMF) will be critical to improving investor confidence and boosting performance in the new year.

Investor confidence has continued to wane amid expectations that the Government will not sign a standby agreement with the IMF by December 31. The Jamaican dollar has also continued to decline in the absence of an agreement.

Jackson told The Gleaner yesterday that the IMF deal would be critical to building investor assurance and maintaining growth in central sectors such as tourism - a sector which he predicts will perform above expectation.

"The rest of the economy continues apace, even waiting for [the] lynchpin which is the IMF agreement, which people want to see in place so that they can be assured that the foreign-exchange resources will be there to meet their needs," he said.

According to Jackson, the area of challenge for the Government will be to improve the country's balance of payments, which has not been an easy task for either the current or previous administration. In that regard, he warned that Jamaicans might not find some of the terms of the agreement pleasant once it is finalised.

"The major issues that are required to be dealt with, which is cutting the cost of the civil service ... pension reform and even tax reform, are not easy to deal with," Jackson said. "And then there is the whole matter of waivers which is another sticking point. Negotiations continue from all indications. I suspect there will be one (standby agreement), but some of the terms will not be very palatable to the Government and to the people."