KINGSTON, Jamaica: Finance Minister, Dr. Peter Phillips, expects a drop in demand for Jamaican exports as a result of the fiscal challenges facing European countries and the slower-than-expected recovery of the U.S. economy and the rest of the developed world.
Dr. Phillips’ assessment comes just days after the International Monetary Fund (IMF) lowered its growth forecast for the global economy from 4 per cent to 3.25 per cent in 2012.
The minister said the prospect of a deepening global economic downturn means that Jamaica must find ways to boost its economy.
“It might mean lower demand for some of our exports; it might mean slower remittance of earnings from Jamaicans overseas…depending on their personal situation,” he said. “Overall, we will have to redouble our efforts to export more, to seek new markets… we will have to try and source investment funds from other places that are not going to be as affected by the recession as the United States and Europe.”
Phillips said the government would need to tighten spending and be more prudent in managing the country’s financial resources.
“It means that we will have to manage our resources… reduce waste and spend only what we are able to secure through revenues, because we have to sustain stability in the economy and reduce the debt, so that we can get out of this debt trap that is slowing down our capacity to grow as a country,” he said. “It will be difficult in the near term, particularly if the recession is a deep one, but I think, in the end, we can lay the foundation for a better future for all our people.”
With respect to the extent to which expenditure cuts will be reflected in the forthcoming Supplementary Estimates, the minister said that it is too early to provide specifics.
“We would rather expand than cut, but we have a responsibility to the country and, most of all, to our children’s future, to ensure that Jamaica has a strong economic foundation going forward, and we can’t build that foundation on just borrowing money to meet our basic expenses,” said Phillips.
A team from the Jamaican government will travel to the U.S. this month for talks with the IMF and other multilateral partners. Phillips said that, during the upcoming IMF negotiations, the administration will consider several options, including a staff-monitored program.
“Nothing is off the table, except that we want to have an agreement that will build confidence in the investment community and among all stakeholders.
“We are going to enter the negotiations with the IMF and we have a range of options available to us, including a staff-monitored program. We are going to look at the options when the negotiations get to that intensive stage, but much more technical work needs to be done…looking at the projections going forward.”