Gov't needs a stimulus plan, not balance of payment plan, sa

[Dr.Dudd]

Gov't needs a stimulus plan, not balance of payment plan, says economist

BY STEVEN JACKSON Observer writer [email protected]

Tuesday, January 05, 2010


ECONOMIST Dr Davidson Daway has urged the Government to stimulate the economy as a parallel strategy to the country's request for a US$1.2-billion loan from the International Monetary Fund (IMF) for balance of payment support.

"We are talking about using that US$1.2 billion for balance of payment, but as far as I am concerned this makes no sense. The reason is we should be using that money to develop our infrastructure, because we have to be able to create a situation where we can sustain the payments of the loans we intend to borrow," he told the Observer's weekly Monday Exchange meeting of reporters and editors at the newspaper's Beechwood Avenue head office.


Financial analyst Dennis Chung (right) makes a point at yesterday’s weekly Monday Exchange meeting of Observer reporters and editors at the newspaper’s head office in Kingston. Looking on are Caribbean Business Report co-ordinator Al Edwards (left), who moderated the discussion, and economist Errol Gregory. (Photo: Naphtali Junior)
Financial analyst Dennis Chung (right) makes a point at yesterday’s weekly Monday Exchange meeting of Observer reporters and editors at the newspaper’s head office in Kingston. Looking on are Caribbean Business Report co-ordinator Al Edwards (left), who moderated the discussion, and economist Errol Gregory. (Photo: Naphtali Junior) 3/3

While acknowledging that the IMF releases the funds to be used for balance of payment support, Dr Daway pointed out that it expedites the accessing of loans from other multilateral lending agencies and emphasised that the Government needs a stimulus plan, not a balance of payment plan.

"The major thrust (needed) for Jamaica at this time is productivity," he argued. "We are doing all sorts of loaning and looking for money but we are not structuring a plan for productivity."

Daway, who is a lecturer and former United Nations economist, contended that the philosophy of the IMF had not changed since Jamaica received assistance from the agency in the 1970s.

"The IMF has not yet changed, they implement the same attitudes since the 70s. The people who go to the IMF are emerging nations... they put you in a situation where you always have to beg," he charged, adding that the Government's debt model will only lead to debt.

"So the cycle continues," he stated.

[Dr.Dudd]

Re: Gov't needs a stimulus plan, not balance of payment plan, sa

Hope and despair

Economists differ on Ja’s future after IMF

BY JULIAN RICHARDSON Assistant business co-ordinator [email protected]

Tuesday, January 05, 2010


FINANCIAL analysts agree that 2010 will be a challenging year for Jamaicans, but while some see light at the end of the tunnel, others see nothing but 'doom and gloom'.

University of Technology (UTech) lecturer Errol Gregory expressed optimism that by signing the pending US$1.2-billion standby agreement with the International Monetary Fund (IMF), the country will be in a position to put itself on a path towards economic recovery.


Director of Fitz-Ritson & Associates, Karen Fitz-Ritson (centre), makes a point during yesterday's Monday Exchange meeting of reporters and editors at the Observer's Beechwood Avenue head office. Listening are Mark Croskery (left), CEO of Stocks and Securities Limited, and retired United Nations economist, Dr Davidson Darway. (Photo: Naphtali Junior)
Mark Croskery (right), CEO of Stocks and Securities Limited makes a point during yesterday's Monday Exchange meeting of reporters and editors at the Observer's Beechwood Avenue head office. (Photo: Naphtali Junior)
Mark Croskery (right), CEO of Stocks and Securities Limited makes a point during yesterday's Monday Exchange meeting of reporters and editors at the Observer's Beechwood Avenue head office. (Photo: Naphtali Junior) 2/2

Gregory, one of several financial experts who were guests at yesterday's weekly Monday Exchange meeting of Observer reporters and editors at the newspaper's head office in Kingston, said that, of critical importance is that the IMF deal will open up other financing options -- such as the World Bank and Caribbean Development Bank -- and allow Government to pursue a policy of lower interest rates and reduce debt servicing costs.

"I'm still confident that we will have an agreement, and part of that confidence comes from the fact that the Government's central policy is to replace borrowing on the overseas financial market with a return to the international lending agencies," said Gregory. "I can't see the Government pursuing any strategies that would jeopardise us coming to an agreement with the IMF, so I'm looking at that as a given.

"With that secured, I think government policy of pulling rates down would this time be sustainable," Gregory added.

However, outspoken retired United Nations economist and educator Dr Davidson Daway disagreed. Daway warned that Jamaicans are "going to have a very uncertain year".

"We have to do things to bring about that change that we are looking for and at this particular time, I see very little movement in that direction, to be honest," said Daway. "What I see is people procrastinating and people not knowing what direction to turn."

Daway supported his assessment with the fact that the Government has missed several deadlines to come up with an agreement with the IMF, a deal which, he said in any case, will not have the country's best interest at heart.

"With the IMF situation, having an opportunity to see them operating before, they will bring you to your knees before allowing you what you're supposed to have," he said. "I can honestly say that the IMF is not in anybody's interest, they have their own interest and they will not change because that is the culture of the IMF."

Director of Fitz-Ritson & Associates, Karen Fitz-Ritson, said that the Government needs to do more to stimulate a sense of hope among Jamaicans.

"What we need to do is to get the message across that 'yes, there is a problem, but we are not going to fold up and die, we are not going to falter to what is happening'," she said. "We have to have that level of resilience and that whole process of education is going to be important."

Fitz-Ritson also said that she had hope for Jamaica's future as there exists a pool of talent, especially among young people.

"Where I sit, I see a lot of people thinking about action," said Fitz-Ritson. "We need to ignite and look at the possibilities instead of looking at the doom... Yes, we have to make sacrifices, but if we look at the bigger picture, if we are prepared to make the sacrifices, what would be better for us at the end of the day... Those are the sort of positive messages that I would like to see from leadership..."

Financial analyst and Observer columnist Dennis Chung said that the Government's ineffectiveness in tackling burdensome issues such as crime and bureaucracy is a hindrance to any amount of positivity.

"You have to look at what it is that prevents people from going somewhere, and the thing that prevents people from having that vision really boils down to uncertainty," said Chung. "There is no way that people will be satisfied with the crime situation as is and the impediments to doing business."

Mark Croskery, CEO of Stocks and Securities Ltd, added that bank lending rates and electricity are also prohibitive factors dampening hope.