The International Monetary Fund (IMF) on Monday revealed that continued reform implementation in Jamaica, will not only safeguard hard-won gains but also deliver stronger growth and job creation.
Risks are high
The IMF Executive Board earlier this month concluded a review of the US$1.68 billion Stand-By Arrangement (SBA) and the IMF in a statement said after five years of reforms and tenacious fiscal consolidation, risks from reform fatigue and loss of social support are high, especially as growth remains feeble and crime escalates.
“Addressing some of the entrenched structural problems that hamper growth is not an overnight task; these difficult reforms require continued broad-based support and policymakers’ commitment to persevere with the implementation,” the IMF noted.
Turning point for Jamaica
The Washington-based financial institution said that the economic reform program, which began in May 2013, has been a turning point for Jamaica.
“With broad-based social and political support for reforms, the Jamaican government—over two administrations—has embarked on a path of fiscal discipline, monetary and financial sector reforms, and wide-ranging structural improvements to break a decades-long cycle of high debt and low growth.”
The IMF said that considerable progress has been achieved on macroeconomic policies and outcomes, noting that fiscal discipline, anchored by the Fiscal Responsibility Law, has been essential to reduce public debt and secure macroeconomic stability.
Employment at historic high
It said employment is at historic highs, inflation and the current account deficit are modest, international reserves are at a comfortable level, and external borrowing costs are at historical lows.
But reducing wage bill is critical
The IMF said that structurally reducing the wage bill is critical for the government to reprioritize spending toward growth-enhancing projects. It said more expenditure is needed for infrastructure, citizen security, building agricultural resilience, health, education, and the social safety net.
It also noted that improving social outcomes and fostering inclusive growth will require addressing structural bottlenecks and creating an enabling environment for private sector.
