Jamaica News: The Government has been commended by business leaders for taking “decisive action” in providing the $25 billion stimulus, which includes a $10 billion contingency provision to address prevailing and potential fallouts from the Coronavirus (COVID-19).
The provision has been earmarked to finance grants to employees, businesses, and vulnerable persons, among others who have been or are likely to be adversely impacted by the virus, for which there are 30 confirmed cases and one death since the outbreak in Jamaica.
Jamaica Employers’ Federation (JEF) President, David Wan, tells JIS News that the Government’s gesture “demonstrates that the authorities are thinking two steps ahead of everything.”
He says that against the background of announced closures and scaling down of business operations, the provision is “very crucial” and “well thought-out.”
“This is so because you want to get assistance to those who are most vulnerable… those at the lower end of the wage scale, who are least likely to have any meaningful resources available to survive this period,” the JEF President argues.
While acknowledging that “more may need to be done,” consequent on the potential wide-ranging ripple effect the virus could have on many industries, Mr. Wan says the move by the Government to initiate the intervention “is quite good.”
Small Business Association of Jamaica (SBAJ) President, Hugh Johnson, also welcomes the intervention, describing it as “a good move.”
Meanwhile, both business leaders believe that Jamaica is in a stronger position economically, to substantially deal with the COVID-19 and recover from the resulting impacts.
They say that the extent of resources at Jamaica’s disposal, coupled with the fiscal stimulus, should provide an ample buffer in the near term, at minimum, against the pandemic, without the need for external assistance.
The accumulated resources, inclusive of Net International Reserves (NIR) at the Bank of Jamaica (BoJ), totaling some US$3.1billion, results from the Government’s steadfast ongoing implementation of the country’s Economic Reform Programme (ERP) that has yielded significant macro-economic improvements for the country.
Similar sentiments about Jamaica’s position have also been expressed by global credit rating agency, Moody’s.
The scaling down of activities in the public and private sectors in a bid to restrict the spread of the disease in Jamaica and other countries globally has prompted the International Monetary Fund (IMF) and the World Bank Group to pledge their readiness to help member countries tackle the challenges posed by the virus.
This undertaking was given in a joint statement issued by IMF Managing Director, Kristalina Georgieva, and World Bank President, David Malpass, earlier this month.
They indicated that both institutions’ Rapid Financing Facilities can be quickly deployed to strengthen health surveillance as well as the provision of technical assistance and policy advice for affected member countries.
However, Mr. Wan tells JIS News that “from a financial standpoint, I feel confident that we can deal with [COVID-19],” adding that he does not foresee the authorities seeking external assistance in the near future.
“What it boils down to is that we have about six months’ worth of foreign exchange reserves at the BoJ. What this means is that if every company in Jamaica that earns foreign exchange [were to] shut down [partially or fully], we would still have enough [to cover] six months [of goods and service imports],” he points out.
Mr. Wan also notes that the Government has the option of utilising inflows from the primary surplus, which equates to 6.5 per cent of the budget.
The facility’s establishment was among the conditions stipulated by the IMF for implementation by the Government, as part of the financing programme support for Jamaica.
According to the Government’s 2020/21 Fiscal Policy Paper, a total of $112.7 billion was generated during the first nine months of the 2019/20 fiscal year.
The JEF President argues that this facility could be utilised as a relief mechanism under the prevailing circumstances.
“Because we have built up so much reserves and our debt has been [significantly] reduced… there is a lot we can do with our own internal actions before we reach out to the IMF. So, I think they’ll wait until it’s absolutely necessary,” he adds.
While acknowledging that Jamaica has the option of seeking external assistance, Mr. Johnson does not foresee the need to do so in the immediate future.
“We are in a better position economically than we were 10 or 15 years ago. This has resulted from [steadfast implementation of] Jamaica’s economic reform programme, otherwise we would be 10 times worse off today,” he tells JIS News.
Both leaders indicate that they remain very optimistic about the prospects for Jamaica’s recovery from the onslaught of COVID-19.
Source: JIS News