IMF – possible impact
Well it is official we are now going back to the IMF and the discussions are abounding as to the conditions that will be attached to the arrangements and whether the IMF has changed. The years of neglecting the economy and borrowing and then wasting those resources has come back to haunt us. We are officially bankrupt, living on borrowed funds with seemingly no way out of the situation.
It is likely that the IMF will require us to first deal with the budget deficit. We have to find a way to ensure that we do not spend more than we earn which will at least help us not to increase our total debt. I would like to point out that we have to earn a surplus in order to start reducing our debt. This will not be possible without a reduction in interest rates even if it results in a devaluation of the Jamaican dollar.
Another condition may be the reduction in the balance of payments, that is, the surplus of imports over exports resulting in a shortfall of foreign exchange earnings. The fact is that we import far too many things and do not produce enough for export. We need to get to a more balanced position reducing our exposure to foreign exchange shortage and further devaluations.
Thirdly, the size of government will surely have to be addressed as it remains the largest drain on the budget outside of debt. I do not see how it is possible to reduce the budget without reducing the size of government. The past 20 years of no growth have served to restrict employment opportunities for these persons and it has also served to reduce the amount of taxes that government collects.
Finally, any agreement must address the revenue that the government is losing because there are a significant number of persons who do not pay their taxes. In order to close the budget gap the government has to take firm action on tax evaders.
For me though, these things are necessary with or without the IMF the difference is that if we go through the IMF they will ensure that we do them whereas if we don’t we will be tempted to put it off for a future date.
Feedback question: Should we try to go it alone without the IMF?
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LEGALIZE GANJA IS THE ONLY ANSWER SHORT OF PUBLICLY DECLARED THE COUNTRY IS BANKRUPTED. BECAUSE A LOT OF JAMAICANS MIGHT BE ASKING WHAT WE MEAN BY BANKRUPT!… SOME OF THEM HAVE NO CLUE. BECAUSE REAL JAMAICANS NEVER GO BANKRUPT. NO MATTER HOW ONE HEAR THEY CRY THAT THEY HAVE NOTHING. THEY ALWAYS FIND A WAY TO FIND SOMETHING!… SO THEY MAY BE THINKING THAT THE GOVERNMENT CAN DO THE SAME!… BUT ITS A LITTLE MORE TECHNICAL THAN THAT OF THE ORDINARY MAN.
BUT THERE IS THINGS THE GOVERNMENT CAN REALLY DO. THEY JUST HAVE TO DECIDE TO DROP THIS PARTY TIES. AND THEN THEY WILL BE ABLE TO SEE MORE CLEARLY.
THEY WONT BE NO LONGER LOOKING AT THE TIP OF THEIR NOSE. BUT WAY AHEAD OF THEM WHERE THEY WILL BE ABLE TO SEE WHAT IS OUT THERE AND WHAT IS AROUND THEM AND WHAT IS COMING TOWARDS THEM. SO THEY CAN BE BETTER PREPARED TO FACE IT.
THE REASON WHY THE GOVERNMENT HAVE PROBLEMS COLLECTING OR HAVING PEOPLE NOT PAYING THEIR FAIR SHARE OF TAXES. ITS BECAUSE THE GOVERNMENT IT SELF HAS SET A BAD EXAMPLE. BY ALIGNING ITSELF WITH CRIMINALS. THUS RENDER THE GOVERNMENT POLICIES INEFFECTIVE. EVERY BODY LOOK AT WHAT THEY DO ANS SAID” IF THEY DO THIS , THEN WHY SHOULD I DO THE OTHER?… THE GOVERNMENT NEED TO SET AN EXAMPLE. MANAGEMENT IS A LITTLE KNOWN SKILL WHEN IT COME TO GOVERNMENT EFFICIENCY.
In an ideal situation, I’d say we should try to go it alone. However, in your closing statement you hit the nail on the head as to why the measures needed to be done won’t happen without prodding from the IMF.
I have always believed that the things needed to be done are known by all Jamaicans who seriously and objectively look at what is/has been going on. What has been lacking, unfortunately, is the political will to do the right things and the end result is that Jamaica is where it is today. This is not some characteristic of just this current administration but of previous ones as well. If Jamaica was a business it would be filing the US equivalent of a Ch. 11 Bankruptcy which would entail a total reorganisation and how things get done going forward. So now, Jamaica will be borrowing from the IMF once more and, no doubt, there’ll be some strings attached.
That a foreign entity has to point out what must be done to get the economy on a more sound economic footing is rather sad but then so has the administration of the nation for the better part of close to 40 years now.