KINGSTON — The managing director of the International Monetary Fund on Friday praised Jamaica’s political leadership for making key economic reforms during the first year of a $930 million loan package provided by the Washington-based institution.
During a three-day visit to the Caribbean nation of 2.7 million people, Christine Lagarde said Prime Minister Portia Simpson-Miller’s government has displayed “extraordinary leadership” and an economic reform program was “off to a very strong start.”
Jamaica has so far met all the objectives of a four-year arrangement with the IMF, Lagarde said.
Over the past year, Jamaica has passed four tests in a row without shortfalls. That’s an “exceptionally strong record by IMF standards,” Lagarde said during remarks at Simpson-Miller’s offices in the capital of Kingston.
“The economic outlook is improving. Compared to a year ago, growth has picked up, unemployment has declined, inflation has been brought under control, the current account deficit has shown an ongoing improvement and reserves are starting to recover,” Lagarde said.
The island, which has long had one of the world’s slowest growing economies, entered into its latest arrangement with the IMF last year after a 2010 deal fizzled out under another administration. The current four-year extended fund facility was started amid grim economic forecasts for the debt-shackled island.
But, this time around, there’s growing hope that Jamaica will be able to kick start sustained growth and tackle a punishing public debt burden of roughly 140 percent of GDP. It might even be a notable success story for the IMF, said Damien King, head of the economics department at the Mona campus of the University of the West Indies.
“At this point, there is certainly the possibility for Jamaica to become the poster child of a successful program,” King said in an email. “This is because the fiscal problems and its associated large public debt are likely the main obstacle holding back economic growth in Jamaica. So solving that may indeed release some noticeable growth in this economy.’’
Simpson-Miller said the IMF chief’s visit was a sign of confidence in the country. The prime minister, a political leader who has long painted herself as a champion of the poor, said her government was “conscious of the difficulties our people are experiencing in the current circumstances.”
Lagarde, who has headed the IMF since 2011, also acknowledged that “adjustment is painful” in the short term and many Jamaicans have seen their wages frozen while the cost of food and other essentials has increased. The Jamaican dollar has been steadily devaluing, deepening hardships for many families.
She argued that with fundamental reforms “the foundation for a better economic future can be put in place.”
According to Lagarde, other major reforms still need to be accomplished in Jamaica, including cracking down on tax evasion and improving the business climate.