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'Nowhere else to turn'
PM reiterates need to borrow from IMF
Monday, November 23, 2009
PRIME Minister Bruce Golding yesterday reiterated that the country had no choice but to enter a borrowing relationship with the International Monetary Fund (IMF) and warned that the measures his administration needs to take to correct the economic problems it inherited, two years ago when it came to office, will be very painful.
"It is not going to be easy; it is not going to be painless. There is no anaesthetic that can put the country to sleep while we fix what has to be fixed," Golding, who is also leader of the Jamaica Labour Party (JLP), told the public session of the ruling party's 66th annual conference at the National Arena in Kingston.
Prime Minister Bruce Golding (centre) is greeted by adoring Jamaica Labour Party supporters as he makes his way inside the National Arena, during the party's 66th annual conference, yesterday. (Photo: Joseph Wellington)
Although declaring that he would not use his address to cast blame, Golding couldn't help but take a swipe at the previous Government as he commented on the huge debt that has been strangling the country.
"We were not the ones who 'ran with it', but it is we who have to correct it," he said in reference to former finance minister Dr Omar Davies' now infamous admission of the use of State funds on Government projects to secure a victory for the People's National Party in the 2002 general elections.
Golding reminded his audience that during the campaign for the 2007 general elections he had declared himself to be the driver. "But it is not just a new driver that we needed," he said. "The old bus needs major repairs. It has run for too long without changing oil. The clutch plate is worn out. The gearbox needs to be pulled down. The front-end mash up and the suspension is gone."
Golding pointed out that between the bauxite sector and other export industries, the fall in remittances and the slowdown in foreign investments, Jamaica has lost close to US$1.5 billion in foreign exchange flows. "That is the money we need to pay for the oil that we have to import, raw materials and equipment to keep our factories going, the food that we do not produce for ourselves, the medicines that our hospitals must have and the money we need to service the foreign portion of our debt," he said.
"Against this background, there is no alternative to borrowing from the IMF; there is nowhere else from which these funds can come," he stressed. "But in its negotiations with us, the IMF has to be concerned with what we are doing and plan to do to put our house in order, to correct the mistakes of the past, to put ourselves in good shape so that we can meet those obligations and satisfy those needs on our own."
Arguing that the IMF is not forcing anything on Jamaica, Golding said that the country has the option of saying 'no thanks' to the lending agency. However, he cautioned that if we take that decision we should prepare ourselves for a painful and certain death.
"What is clear is that we cannot continue on this path," he said. "If we are to have any hope for the future, we have to change course."
He said that the funds which Jamaica will be able to secure from the IMF to meet our external payments is only part of the solution.
"We have to fix the problem that landed us in so much debt, that has prevented us from earning enough so that we have to borrow so much, that creates such a disincentive to investments and causes debt service to gobble up so much of the little that we earn, that we are unable to provide the services that the people need and deserve," said Golding.
Jamaica has been negotiating a US$1.2-billion stand-by arrangement with the IMF for some months now and yesterday Golding admitted that the talks have been going on for longer than expected. But the agreement has taken a longer time, he said, because it was not a quick-fix.
"We have to make sure that it adequately addresses our fundamental problems," he said, adding that there are essentially four elements of the programme:
"(1) Fiscal
How we plan to reduce and eliminate the fiscal deficit, especially against the challenges of the global recession that is still not over.
"(2) Medium-Term Economic Programme
The strategies that must be employed over the next five years to put the economy on a sound footing and the targets that we must set for ourselves to achieve that.
"(3) Policy measures
The changes that must be implemented to support both the fiscal and medium-term programmes.
"(4) Debt management
Initiatives that must be taken to manage the huge public debt and the cost of that debt that is strangling us."
The administration, he said, had already embarked on some of these strategies, particularly as they relate to fiscal discipline. At the same time, he pointed to a number of initiatives that have either already been implemented or are about to be implemented to improve the lives of Jamaicans.
http://www.jamaicaobserver.com/news/..._TO_TURN__.asp
PM reiterates need to borrow from IMF
Monday, November 23, 2009
PRIME Minister Bruce Golding yesterday reiterated that the country had no choice but to enter a borrowing relationship with the International Monetary Fund (IMF) and warned that the measures his administration needs to take to correct the economic problems it inherited, two years ago when it came to office, will be very painful.
"It is not going to be easy; it is not going to be painless. There is no anaesthetic that can put the country to sleep while we fix what has to be fixed," Golding, who is also leader of the Jamaica Labour Party (JLP), told the public session of the ruling party's 66th annual conference at the National Arena in Kingston.
Prime Minister Bruce Golding (centre) is greeted by adoring Jamaica Labour Party supporters as he makes his way inside the National Arena, during the party's 66th annual conference, yesterday. (Photo: Joseph Wellington)
Although declaring that he would not use his address to cast blame, Golding couldn't help but take a swipe at the previous Government as he commented on the huge debt that has been strangling the country.
"We were not the ones who 'ran with it', but it is we who have to correct it," he said in reference to former finance minister Dr Omar Davies' now infamous admission of the use of State funds on Government projects to secure a victory for the People's National Party in the 2002 general elections.
Golding reminded his audience that during the campaign for the 2007 general elections he had declared himself to be the driver. "But it is not just a new driver that we needed," he said. "The old bus needs major repairs. It has run for too long without changing oil. The clutch plate is worn out. The gearbox needs to be pulled down. The front-end mash up and the suspension is gone."
Golding pointed out that between the bauxite sector and other export industries, the fall in remittances and the slowdown in foreign investments, Jamaica has lost close to US$1.5 billion in foreign exchange flows. "That is the money we need to pay for the oil that we have to import, raw materials and equipment to keep our factories going, the food that we do not produce for ourselves, the medicines that our hospitals must have and the money we need to service the foreign portion of our debt," he said.
"Against this background, there is no alternative to borrowing from the IMF; there is nowhere else from which these funds can come," he stressed. "But in its negotiations with us, the IMF has to be concerned with what we are doing and plan to do to put our house in order, to correct the mistakes of the past, to put ourselves in good shape so that we can meet those obligations and satisfy those needs on our own."
Arguing that the IMF is not forcing anything on Jamaica, Golding said that the country has the option of saying 'no thanks' to the lending agency. However, he cautioned that if we take that decision we should prepare ourselves for a painful and certain death.
"What is clear is that we cannot continue on this path," he said. "If we are to have any hope for the future, we have to change course."
He said that the funds which Jamaica will be able to secure from the IMF to meet our external payments is only part of the solution.
"We have to fix the problem that landed us in so much debt, that has prevented us from earning enough so that we have to borrow so much, that creates such a disincentive to investments and causes debt service to gobble up so much of the little that we earn, that we are unable to provide the services that the people need and deserve," said Golding.
Jamaica has been negotiating a US$1.2-billion stand-by arrangement with the IMF for some months now and yesterday Golding admitted that the talks have been going on for longer than expected. But the agreement has taken a longer time, he said, because it was not a quick-fix.
"We have to make sure that it adequately addresses our fundamental problems," he said, adding that there are essentially four elements of the programme:
"(1) Fiscal
How we plan to reduce and eliminate the fiscal deficit, especially against the challenges of the global recession that is still not over.
"(2) Medium-Term Economic Programme
The strategies that must be employed over the next five years to put the economy on a sound footing and the targets that we must set for ourselves to achieve that.
"(3) Policy measures
The changes that must be implemented to support both the fiscal and medium-term programmes.
"(4) Debt management
Initiatives that must be taken to manage the huge public debt and the cost of that debt that is strangling us."
The administration, he said, had already embarked on some of these strategies, particularly as they relate to fiscal discipline. At the same time, he pointed to a number of initiatives that have either already been implemented or are about to be implemented to improve the lives of Jamaicans.
http://www.jamaicaobserver.com/news/..._TO_TURN__.asp
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