By Mickel Allen
As the Jamaican coffers begin to absorb the previously approved $932.3 million Extended Fund Facility loan granted by the IMF, the country’s nationals sit and await the implementation of the structural reforms that promises to ultimately alleviate poverty and induce productivity and economic stability in a sustainable manner.
Mickel Allen is a native of Jamaica, previously employed by the MOE as an English Linguistics and Literature Teacher. She is presently assistant communications coordinator for a diverse organization and a law and society Bachelors candidate. Mickel is an active women’s advocate and volunteers as a counselor and adult educator with Yes We Are Women. She is a supporter and volunteer with COFI Inc. www.coficares.com
The reforms as put forward, once implemented, will seek to reform the Jamaican tax system, introduce a fiscal rule, strengthen public financial management and in so doing will hopefully ensure fair burden sharing. Given Jamaica’s track record and inability to adhere to and follow through on previous loan arrangements with the IMF in particular, unfortunately I, like many, question Jamaica’s ability to make a complete 180, all while repaying their debt. Credit, however, must be given to their -- the government’s -- willingness to employ a “can-do” approach.
Over the past few decades, Jamaica’s debt burden has seriously constrained government fiscal policy. Public investment that would promote long term productivity and growth has been placed on the backburner, while political rivalry and banter have taken precedence. The servicing of debts was also at the fore, though the country failed at even this and, as such, inflation crept in, along with increased crime and societal issues.
In a previous agreement with the IMF as a part of the structural reform to the public sector, in addition to many other impositions, Jamaica was expected to divest or liquidate the national airline -- Air Jamaica by June 2010. In May 2010, control was handed over to the Trinidadian government, which resulted in the loss of 18,000 jobs and high associated divestment costs that negatively impacted the GDP.
What is the defining factor in this loan arrangement… the economic reform agenda? Why will the receipt of these funds suddenly correct the many social challenges that exist in Jamaica, all while reducing public debt…?
Let us be reminded that the loan from the IMF is just a portion of the total funding package of “two billion US dollars from Jamaica’s multilateral partners including the World Bank and the Inter-American Development Bank (IDB), with each having preliminarily agreed to allocate US$510 million over the next four years.”
“The program includes a heavy and frontloaded reform agenda to help the economy recover as quickly as possible. The reform agenda seeks to ensure fair burden sharing and is focused on actions to strengthen public financial management, introduce a fiscal rule, reform the tax system, improve the business climate, move towards inflation targeting, and reform the securities dealers sector. The fiscal reforms are essential for a sustained fiscal consolidation effort to put debt on a downward trajectory. Structural reforms to achieve higher and sustained growth are pivotal to long-term economic stability and increased welfare of the population.” www.imf.org/external/np/sec/pr/2013/pr13150.htm
On the other hand, there are many pathways to the resolution of issues that arise. The IMF if nothing else has given the Jamaican government a roadmap, along with a much needed tool that may help the country chart its course to a more stable, productive and truly independent society and economy. It is my hope that the state’s governance is able and collectively willing to truly capitalize on this “miraculous” opportunity by exercising clear and unbiased judgment and appropriate, transparent, allocation of the funds.
“In order to rise from its own ashes, a Phoenix first must burn
-Octavia E Butler