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BUDGET 2014-2015: Phillips calls for honest debate on exchange rate

Published:Thursday | April 17, 2014 | 4:24 PM

Daraine Luton , Senior Staff Reporter

KINGSTON, Jamaica:

Arguing that much of the commentary on the devaluation of the exchange rate is designed to spread confusion and apathy in the country, Finance Minister Dr Peter Phillips today said it was important that Jamaicans be treated to an honest debate on the subject.

Opening the 2014-2015 Budget Debate in the House of Representatives this afternoon, Phillips said the value of the Jamaican dollar is being determined by the market, and that will continue to be the case.

SEE: The revenue measures 2014/2015

The Jamaican dollar declined by 10.8 per cent over the past year.

Phillips said this was primarily due to higher demand for foreign products purchased in United States dollars.

He said the Government would not be embarking on the rationing of foreign exchange or the banning of imports.

"We should try to learn from our history.

These approaches do not work.

They lead to the emergence of a black market for currency on the one hand or to increasingly sophisticated effects to smuggle goods, breach our borders and inevitably to shortages of goods in the market," Phillips said.

He told legislators that the adjustments that have been made to the Jamaican dollar would allow local produce to be more competitive in external markets while at the same time allowing for the development of local goods.

He noted, for example, that construction companies were now looking to source more building materials locally as a result of the devaluation of the Jamaican dollar.

“We make no apology for this shift in production and we need make no apology for this shift which will put Jamaicans to work rather than borrowing to finance a current account deficit to keep foreign workers employed at the expense of a growing Jamaican debt,” the minister said.

Phillips said the Bank of Jamaica was prepared to intervene in the market in order to reduce and eliminate “those who want to speculate on the exchange rate or disrupt the stability of the market”.

WATCH: Phillips announces $6.7 billion tax measures

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