http://www.jamaicaobserver.com/business/Pay-back-IMF_7303493
Wednesday, January 06, 2010
GOVERNMENT cannot repay the International Monetary Fund (IMF) standby arrangement without increased productivity to offset its declining revenues, say analysts.
"I am cautiously saying no… that we won’t be able to pay it back because there are so many impediments in the system that is not very conducive for growth at this time. We need to change some of these factors," stated consultant Karen Fitz-Ritson at the Monday Exchange meeting of Observer reporters and editors at the newspaper’s head office in Kingston. "It is going to rely on the creativity of the Jamaican people."
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Retired UN economist and educator, Dr Davidson Dalway makes a point during Observer’s Monday Exchange meeting. Looking on is Karen Fitz-Ritsonn , director of Fitz-Ritson & Associates. (Photo: Naphtali Junior)
She said that labour productivity needs to be increased and bureaucracy reduced, whilst the real sector needs to increase production in areas, such as ethanol and rice.
Analysts are sceptical that the Government will collect the $21.8 billion annualised as projected under its new tax package to supplement declines in the real economy. Up to November, Government revenues fell short of initial projections by some 10 per cent or $22 billion.
The new tax package was seen by the party in opposition as a conditionality to service the pending IMF standby arrangement valued at US$1.3 billion.
"We been talking about bauxite as a major earner. As a financial analyst you diversify your portfolio. How can an economy survive on three major things," stated the director of Fitz-Ritson & Associates.
Economist, Davidson Daway, who was also a panellist at the Monday Exchange meeting, was concerned that jobs could be cut this year, which amongst other things would reduce taxation revenue to Government. His response was to offer a reduced work week to maintain employment and thereby offer "significant saving" to government.
"That is where I am worried about the IMF package. If you going to displace people you have to find some way to get the revenue to replace their contributions," stated Daway, who is a lecturer and former United Nations economist. "In that case, I am worried, except that there is something in the pipeline to satisfy that need."
Several financial experts were guests at the Monday Exchange meeting but all agreed that 2010 would be a challenging year for Jamaicans.
University of Technology (UTech) lecturer Errol Gregory was the most optimistic, arguing that the signing the US$1.3-billion standby agreement would chart recovery for Jamaica currently in a recession.
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