Finance Minister Audley Shaw says there is no reason not to say yes to a return to the IMF. - File
Minister of Finance and the Public Sector, Audley Shaw, will on Monday ask his Cabinet colleagues to sign off on a submission that will, if approved, lay the groundwork for Jamaica to revise its borrowing relationship with the International Monetary Fund (IMF).
"I am now preparing a submission to Cabinet, it will be put to Cabinet on Monday in terms of advising the Cabinet on the broad parameters that could lead us to an arrangement," Finance Minister Audley Shaw told the Financial Gleaner Wednesday night.
"A final position has not yet been taken; Cabinet will have to make that decision, anyway. But my decision is to fully prepare ourselves that if we need the help we can get it on a fast track."
Prior to this disclosure, Shaw, who was a guest at an anniversary celebration by Sterling Asset Management in New Kingston, said Jamaica was facing the real possibility of being unable to finance its $555.7 billion budget.
Receipts from bauxite/alumina and tourism, two of Jamaica's most lucrative export sectors, have been hard hit by the global economic recession.
Collapse of bauxite sector
Shaw said the financial analysts have quantified the collapse of the bauxite sector on the Jamaican economy at US$600 million in just one financial year, which he said represented 10 per cent of the budget and five per cent of the country's gross domestic product.
"In one year, five per cent of it get lick out, gone because of the closure of the bauxite and aluminium industry," he said.
The island is one of the world's biggest producers of bauxite and alumina, but has lost around two-thirds of its production and earnings from the sector with two plants now closed due to the falling demand for aluminium in China and other economies.
Shaw argued that Jamaica has been significantly affected by the global economic downturn and needs help and pointed out that some US$700 billion have been channelled through the IMF by the G-20 countries as financial support to help with the global financial sector.
"So I ask the question, if this has been done why should Jamaica not avail itself of access to some of these funds through the IMF since we are affected just like most other countries have been affected?" the finance minister said.
Accessing funds from IMF
"That is my rhetorical question and my answer is that there ought to be no reason to stop us from accessing funds from the IMF."
Jamaica has had a relationship with the IMF since the 1970s but, choking at the conditionalities imposed by the world's chief financial watchdog, the then Patterson administration ended the borrowing arrangement in the 1990s - opting instead to hunt for commercial capital on the domestic and overseas markets, and loans from friendly governments and trade partners.
Within the two-decade period of severe hardship, Jamaicans began to grow resentful of the Fund, which was seen as too interfering in the decisions on what programmes government could undertake.
But Shaw said Wednesday night that there was no need for this type of apprehension - not this time.
"We have been in talks with the IMF and one of the things I can tell you is that there is no need for the great concern for conditionalites that will be oppressive, that will be destructive to the social sector, that will be destructive to the financial sector. Not at all," said the finance minister.
"The IMF has grown up, the IMF has matured," he said.
Shaw said the Fund has assured him that if the country does well with its performance matrices, which it has with the other multilateral organisations such as the Inter-American Development Bank and World Bank, that those will form the framework of the conditionalities that the IMF requires.
dionne.rose@gleanerjm.com