KINGSTON, Jamaica: Prime Minister Bruce Golding says his government will not seek financial assistance from the International Monetary Fund (IMF) since the nation does not have a balance of payment problem.
“You seek IMF intervention when you have a balance of payment problem. We have not had a balance of payment problem for a long time,” Golding said.
However, he noted that the consequences of the global financial crisis, including the downturn in the bauxite industry and the reduction in remittances, could create challenges.
“We are watching that situation very closely with the fallout of bauxite and alumina, which accounts for 60 per cent of our merchandise export, and if we are only able to keep the JAMALCO plant going for this year, we are talking about possibly only about 30 per cent to 35 per cent of your traditional export capacity that would still be on line.
“We know what is happening to remittances, it is still coming in, but the levels have fallen significantly. We have done well in terms of keeping the tourism numbers up, but the tourism spending is down. When you look at that, you have to contemplate the possibility that you could end up with a balance of payment challenge,” he said.
Golding said Jamaica has constantly been engaged with the IMF as “they do their Article 4 assessment here” and indicated that Minister without Portfolio in the Ministry of Finance and the Public Service, Senator Don Wehby, and the Governor of the Bank of Jamaica, Derrick Latibeaudiere, will meet with IMF officials in Washington shortly.
The Prime Minister said the Group of 20 (G-20) leaders had provided additional resources to the IMF and issued guidelines detailing how the funds should be applied. He also noted that his government has “to learn more”.
“We want to make sure that whatever facilities we could possibly require at any time in the future, we want to make sure that those facilities are available but, as of now, we do not have that challenge, but we are in uncharted waters.
“Jamaica has never been through this before so we are looking at that in the event that this becomes necessary that we would be able to have discussions with the IMF,” Golding said.
The G-20 leaders, at their recent Summit in Europe, committed an additional US$500 billion (£340 billion) of funding for the IMF, to enable the organization to lend money to poorer countries hit hard by the global economic downturn.
The commitment will increase the IMF’s resources to US$750 billion and allay fears that the IMF would run out of funds to help countries that are vulnerable to the global financial crisis. (JIS)