A side view of the Ministry of Finance, in Kingston, home of the treasury. - File

Much of the current discussions regarding Jamaica's re-engagement with the International Monetary Fund (IMF) have focused on the possible terms and conditions that the Fund will attach to the loan it will be making to the Government of Jamaica.

Now that Minister of Finance Audley Shaw has indicted that the government will be applying for a US$1.2 billion 24-month stand-by facility, the impression given is that these funds will simply fill the gap in the country's balance of payments position as a result of the shortfall in foreign exchange earnings due to the downturn in earnings from bauxite and tourism and a reduction in remittances.

In effect, this is just a temporary blip in the nation's earning power which will be automatically corrected when the expected recovery takes place in the global economy, particularly with our major trading partner, the United States.

These discussions have missed the point of the irrevocable fundamental shift that has taken place in the structure of our economy that will never be the same again.

The two major agricultural export sectors, sugar and bananas, were major employers for unskilled/semi-skilled Jamaicans.

The divestment of the government-owned sugar estates and factories, and the abandonment of the exporting of bananas by Jamaica Producers Group mean that the employment patterns will permanently change in the sugar and banana belts.

Guaranteed access to the European markets and guaranteed prices and quotas are going as well.

And we have yet to see a comprehensive assessment of the earning and employment potential that we can expect in the immediate, medium and long-term.

We have also been sold the idea that divestment of assets of the Sugar Company of Jamaica, Air Jamaica and other public bodies means a cap on the debt accumulation that has been occurring each year which the tax payers of Jamaica will have to pick up.

This might be so, but exactly how deep are the financial losses of these entities that will have to become a formal part of the public debt in the very near future?

Off-balance methods

Over the last decade both the current government and the previous PNP administration have employed creative off-balance sheet accounting methods which have hidden the true picture with regards to the overall losses that these entities and other public bodies have accumulated.

The Opposition has called on the Bruce Golding administration to provide a supplementary budget prior to signing the loan agreement with the IMF.

But no useful purpose will be served by providing the Parliament and the public with another hastily prepared, ill-conceived budget exercise that overestimates revenue projections that two months into the fiscal year are $5 billion off target, underestimates expenditure, and simply rolls over debt payments.

Rather, a more useful exercise would be to present a comprehensive stabilisation and recovery programme which outlines the following:

● Current direction and prospects for the Jamaican economy, including actual and projected GDP - for the period 2009-2013. Emphasis should be placed on the expenditure components of GDP; output and income projected regarding the major sectors of the economy; gross investment financing - that is, internal savings, public and private, and external savings; and the projected balance of payments for 2009-2013.

● The Government's proposed public sector investment programme by sector, 2009-2013, including expected sources of domestic and external financing; and expected disbursements on new and ongoing projects over the period.

● Consolidated public sector balances and financing for 2005-2009. This should include central and local government balances, selected public entities, Bank of Jamaica losses, other significant public sector balances/transactions, divestment proceeds, domestic financing and foreign financing inclusive of grants.

● Consolidated public sector debt showing outstanding balances at the beginning of period (2005-2009), service payments, commitments, disbursements and outstanding amounts by type of creditor.

This type of detailed presentation would focus public attention on the true state of affairs of the Jamaican economy, and the prospects in the short to medium term.

Because, while the funds from the IMF and the multilaterals will help in balancing the books over the next two years, the deep problems in the Jamaican economy will not be solved by simply taking a wait-and-see attitude.

renee.shirley@yahoo.com