Sunday 12 July, 2020

IMF tells Jamaica to build agriculture to grow economy

Head of the IMF’s Staff Mission Team to Jamaica, Dr Uma Ramakrishnan said greater attention needs to be paid to the sector.

Head of the IMF’s Staff Mission Team to Jamaica, Dr Uma Ramakrishnan said greater attention needs to be paid to the sector.

The International Monetary Fund (IMF) is urging the Jamaican government to build a resilient agriculture sector in order to help spur economic growth.

Head of the IMF’s Staff Mission Team to Jamaica, Dr Uma Ramakrishnan said greater attention needs to be paid to the sector.

“Where we think we can all agree that things can look better is on the growth outcome. Jamaica is getting exposed to a lot of weather-related shocks that are impeding the agriculture sector’s full potential and that is something we think needs to be worked on,” said Ramakrishnan as she presented Jamaica’s third review under the IMF’s Standby Arrangement with Jamaica on Tuesday.

Ramakrishnan advised Jamaica to put in place a number of infrastructural improvements that must lead to better farm roads, improved access to finance and addresses land titling issues.

“This has been a chronic problem affecting Jamaica for decades and the agriculture sector is a key sector. It employs a lot of people and its contribution to GDP is increasing, so when the agriculture sector gets hit, the growth number is impacted,” she said.

GDP growth is estimated to have been a disappointing 0.5 per cent in 2017. Weakness in agriculture, slow recovery in mining, and a deceleration in manufacturing offset growth in tourism and construction.

 The multi-lateral agency is revising its growth forecast for Jamaica to just 0.9 per cent in FY 2017/2018.

It has placed growth at  2¼ per cent in the medium term while noting that expected growth dividends from five years of reforms are somewhat offset by remaining structural issues, crime problems and implementation of capacity constraints.

Ramakrishnan also commended the government for its all-time high employment numbers, a reduction in the unemployment rate, which is now at a 10-year low, but said the commensurate growth numbers related to job creation is yet to be seen.

“If we were to break down some of the employment numbers, a lot of it is in the BPO sector and where Jamaica is now in the BPO sector, the value added that is being generated at this point is still not contributing a lot to the headline growth numbers,” she said via video conference from Washington on Monday.

In concluding the 2018 Article IV Consultation and The Third Review under the Stand-By Agreement with the Jamaica, the IMF said Jamaica’s economic reform programe, which began in May 2013 has been a turning point for Jamaica.

“With broad-based social and political support for reforms, the Jamaican government – over two administrations – has embarked on a path of fiscal discipline, monetary and financial sector reforms, and wide-ranging structural improvements to break a cycle of high debt and low growth,” commented the IMF.  

At the same time, newly appointed Minister of Finance Dr Nigel Clarke indicated that the administration has no intention of entering into a new arrangement with the IMF when the current Precautionary Stand-by Agreement ends in late 2019.

To this end, the IMF executive said the agency founded just after the Second World War sees Clarke’s message as a positive one.

“We welcome the ownership that the government is showing in terms of taking charge of the reform programme and this has happened over the last five years and two administrations,” Ramakrishnan said.

 She further declared: “We fully support that message. What we always want for our members is that they graduate from our programmes and be able to sustain the policies so that macroeconomic stability and fiscal sustainability is reached.”

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