KINGSTON, Jamaica, Friday January 27, 2012 – Finance Minister Dr Peter Phillips said demand for Jamaican exports may dwindle due to the fiscal challenges facing European countries and the slower than expected recovery in the US economy and the rest of the developed world.
His assessment comes days after the International Monetary Fund (IMF) lowered its growth forecast for the global economy to 3.25 per cent in 2012, from the previous 4 per cent.
The minister said the prospect of deepening global economic downturn means that Jamaica must find ways to boost its economy.
“It might mean lower demand for some of our exports; it might mean slower remittance of earnings from Jamaicans overseas…depending on their personal situation,” he said.
“Overall, we will have to redouble our efforts to export more, to seek new markets, particularly in areas that are not as affected greatly by the recession; we will have to try and source investment funds from other places that are not going to be as affected by the recession as the United States and Europe,” the minister said.
He explained that the government would need to tighten spending and be more prudent in managing the country’s financial resources.
“It means that we will have to manage our resources… reduce waste and spend only what we are able to secure through revenues, because we have to sustain stability in the economy and reduce the debt, so that we can get out of this debt trap that is slowing down our capacity to grow as a country,” Dr. Phillips stated.
“It will be difficult in the near term, particularly if the recession is a deep one, but I think in the end, we can lay the foundation for a better future for all our people.”
With respect to the extent to which expenditure cuts will be reflected in the soon to be rolled out Supplementary Estimates, the minister explained that it is too early to provide specifics.
“We would rather expand than cut, but we have a responsibility to the country and most of all to our children’s future, to ensure that Jamaica has a strong economic foundation going forward, and we can’t build that foundation on just borrowing money to meet our basic expenses,” the minister emphasised.
A government team travels to the US next month for talks with the IMF and other multilateral partners.
During the upcoming IMF negotiations, Dr Phillips said, the administration will consider several options, including a Staff Monitored Programme.
“Nothing is off the table, except that we want to have an agreement that will build confidence in the investment community and among all stakeholders,” the minister stressed.
“We are going to enter the negotiations with the IMF and we have a range of options available to us, including a staff monitored programme. We are going to look at the options when the negotiations get to that intensive stage, but much more technical work needs to be done…looking at the projections going forward,” he added.