Fri | Jun 5, 2020

WATCH: New IMF programme not on the cards, says Finance Minister

Published:Sunday | March 29, 2020 | 12:00 AM
Clarke: I'm saying that all options remain on the table but that particular one is not one that's on the cards.

Damion Mitchell, Integration Editor

Finance Minister Dr Nigel Clarke has said a borrowing relationship with the International Monetary Fund (IMF) is "not on the cards" at this time but would not say whether it has been discussed.

Speaking at a special COVID series Gleaner Editors' Forum on Friday, Clarke said, at present, Jamaica does not have a balance of payments issue with the net international reserves over US$3 billion.

"At this point in time, Jamaica has the reserves and the cushion to be able to respond," Clarke said.

WATCH: Finance Minister talks COVID and IMF

But with tourism grinding to zero, and other sectors like agriculture starting to show decline, the Finance and Public Service Minister said the government is keeping all options open.

"Clearly, if things were to deteriorate, one could always look at the options. I'm saying that all options remain on the table but that particular one is not one that's on the cards," he said.

Last week, the Central Bank projected a three per cent economic decline for Jamaica this year.

That projection came after what Prime Minister Andrew Holness called the "rapidly approaching" community spread of the coronavirus, which could see a further contraction of economic activities as a consequence of containment measures.

This would have further implications for revenues at a time when the government has already indicated that it will have to make reallocations to accommodate COVID spending in addition to the $7 billion it has earmarked as contingency plus the $3 billion in asset tax cut that banks have deferred for a year.

So, was it bad judgement on the part of the finance minister to have announced an $18 billion tax give-back on the same day Jamaica reported it's first case of the coronavirus knowing that a COVID response programme could cost more?

Clarke does not believe so.

"Preparation is better than good luck," he said. "Had we not accumulated reserves that we could have used to reduce the primary surplus which we could have used to reduce the debt trajectory up until then, I would not have been in a position," he added.

Last year, Jamaica ended its borrowing relationship with the IMF after a successful seven-year programme, but continued to engage the fund for technical support through a Kingston-based office.

Meanwhile, the IMF boss reported last week that a global economic recession has started.

This will affect Jamaica which heavily depends on tourism and remittances, both of which are now taking a cataclysmic hit.

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