EDITORIAL - Lay bare the facts, Mr Shaw

WE HAVE before urged the Government, and more particularly the finance minister, Mr Audley Shaw, to come clean on the state of Jamaica's standby agreement with the International Monetary Fund (IMF).

We believe it important to repeat that suggestion and hope that the administration take heed. Failure on this front risks eroding public confidence and undermining whatever economic gains to which the Government can lay claim in recent months.

Should Minister Shaw believe that we are overstating the case, or being overly alarmist, the likely default position of ruling party propagandists, we suggest he contemplate two factors.

The first, and perhaps the easiest for the Government to deal with, is the increasing reference by the Opposition to the administration's failure, so far, to reveal the outcomes of the economic reviews in the last quarter of 2010 and the first quarter of this year, in accordance with the terms of the standby agreement with the IMF. And yet, the results for the period to the end of June should now be under review and soon revealed.

It is the Opposition's contention, as well as other critics, that the quarterly 'tests', at least for December and March, were 'failed', and that the IMF agreement is firmly off the rails. To get it back on, the argument goes, will mean tougher conditionalities.

In other circumstances, the administration, while it sorts out its agreement with the fund, might be able to 'spin' such claims that are mere propaganda from political partisans.

However, such a tack will have been made more difficult by the confirmation by the European delegation in Jamaica, reported by this newspaper on Sunday, that, essentially, it has frozen budget support aid to Jamaica until Mr Shaw concludes his restructured agreement with the IMF.

"All budget programmes are dependent on you being on track with the IMF programme," said Marco Mazzocchi Alemanni, the head of the EU delegation. "If you are not, we cannot do anything, which means ... that you are not going to get the money for the time being."

Two things are clear from the EU positions: one is that international donors, and presumably other multilateral institutions, have applied the brakes on financial flows to Jamaica; the other is that whatever difficulty the administration may have in meeting its financial obligations will have got worse.

Not lost

Indeed, the support from the EU is not to be sneezed at. Assuming that everything fell into perfect order this fiscal year, that outlay would have been €39.1 million, of which €6.9 million, or around 18 per cent, has already flowed to the Jamaican treasury. Thirteen million euros of the overall amount was for direct budgetary support.

This money, of course, is not lost. Once Jamaica can assure the international agencies that it is back on a credible fiscal and broader economic path, the cash is likely to flow again.

In the meantime, lower government spending will tighten demand and could even halt the nascent return to growth - a scenario that is likely to worsen if official obfuscation further erodes confidence.

Our suggestion to Prime Minister Bruce Golding and Minister Shaw is to resist their fears of political spectres, lay it all bare, tell Jamaicans the facts and mobilise the country to a consensus on recovery.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.