In a forty minutes speech at the University of the West Indies (UWI), Christine Lagarde, managing director of the International Monetary Fund (IMF) argues that although the devaluation of the local currency may be deemed negative now, it will prove in the long run to be the best decision.
“It is painful but it has restored lost competitiveness,” she told the attentive audience.
“You cannot bleed your reserves in order to support your currency that is overvalued. The currency has to have the right value and the Jamaica dollar was overvalued,” Lagarde insisted.
“It is a credit of this government, the finance minister and Governor of Central Bank to have taken the bull by the horns because it’s hard as it impacts on consumers in the short term,” she said of the depreciation of the local currency.
Lagarde, in her speech, outlined the present and historic challenges of Jamaica and the Caribbean.
“The IMF has changed, yet we do not always enjoy a stellar reputation in some countries. Most of that is unfair as we are the scapegoat,” she said explaining that governments come to the IMF as a last resort and the subsequent harsh reforms are executed by the government rather than IMF.
Lagarde, an invited guest of the government, spent three days in the island.