Jamaica has received glowing tribute from Constant Lonkeng Ngouana, resident representative of the International Monetary Fund for its sustained economic growth and its hard-won macroeconomic stability.
Lonkeng noted that “the world is looking at Jamaica,” and posited the view that “Jamaica is on the right trajectory.”
He made his remarks while addressing the topic of moving from macroeconomic stabilty to growth at a Sterling Asset Management investor briefing recently.
He noted further that although “Jamaica is not an Asian Tiger it has maintained growth over the last eight or nine quarters.”
Lonkeng argued that although one per cent growth level would not be sufficient to lift living standards in general within the country, the trend, however, is positive.
He said, “Sustained economic growth and job creation will come from the private sector taking the lead in identifying opportunities and new markets in a competitive set-up that offers a well-balanced risk-return trade-off,” Lonkeng said.
He also pointed to the utterance of the international ratings agency Moody’s which has indicated its interest in buying Jamaican bonds.
“Moody’s say they want to invest in Jamaican government paper,” Lonkeng stated, adding that the “Jamaican dollar is fairly valued.”
“Jamaican bond yields have been coming down fairly sharply,” he said, adding, “Public debt is on a firm downwards tragectory,” and is moving towards the target of a debt to GDP ratio of 60 per cent. That, he said, is “a comfortable level, when you look at international experience.”
“Jamaica has been borrowing at lower rates than countries with a debt to GDP ratio of 40 per cent,” Lonkeng said.
He further noted that a decrease in inflation puts the country in good stead as one can now put long term plans in place.
“With inflation going down you are able to plan on a longer horizon,” Lonkeng said.
“Jamaica now knows what macroeconomic stability looks like,” he said, pointing to decline in public debt, current account improvement, increase in consumer and business confidence, lower cost of borrowing, and increase in employment.
He noted, however, that Jamaica should not be satisfied with stability but need to now up the ante.
He stated that Jamaica could move forward based on the IMF-supported SBA (Stand-by Arrangement), which was based on four pillars: public sector transformation, social inclusion, citizen safety, and having a more modern central bank centered on inflation targeting.
He lamented the fact that Jamaica is currently spending 67 cents “a very, very high number” from every dollar that it earned in paying interest on debt, the public sector and pensions — “leaving 33 cents for everything else.”
He also noted that the high level of crime is a serious setback to the country’s economic progress.
“Crime is the elephant in the room, which was holding back growth in Jamaica.”
He said the fight against crime should look at understanding the economic thought process behind choosing a life of crime as against an honest living.
“What is my risk? If I get caught what happens to me? I think people make a conscience choice to be involved in criminal activities.”
Yvad Billings, Readers Bureau, Fellow
Edited by Jesus Chan
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