Minister says Jamaica will benefit from devalued currency

By Admin Wednesday August 27 2014 in Caribbean
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KINGSTON: Jamaica’s Finance and Planning Minister, Dr. Peter Phillips, says the nation stands to benefit from several investment opportunities as the result of a devalued dollar.
During a meeting of the Rotary Club of New Kingston, Dr. Phillips said there is potential for a “range of investment activity”, which was not previously possible because the Jamaican dollar was deemed “uncompetitive”.

Phillips cited the local production of cassava as a substitute for imported malt base products for use in the brewing of beer as investment opportunities.

“This can result in (the creation of) thousands of agricultural and agro-processing jobs,” he said.

Phillips said there was also opportunity for tourism expansion, through hotel construction.

“The most important point to note is simply that when you have an overvalued currency, in effect, what you are doing is exporting your jobs and allowing (persons) overseas to produce for your consumption, rather than allowing your own producer to get the benefit of that productive activity,” said Phillips. “Much of this is to be seen because the workout of…new production systems will take some time (to develop.”

However, he acknowledged there would be challenges associated with a devaluation of the dollar.
“We have tried to ease the pressure by expanding social welfare expenditures in the budget for the most vulnerable,” said Phillips.

The Jamaica dollar has been trading recently at over $100 to the U.S. dollar. Since May 2013, it has depreciated by over 11 per cent.

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