PM says Jamaica will pull out of economic crisis
October 25, 2001
PRIME Minister P J Patterson has remained confident that Jamaica can pull out of its economic difficulties from the fallout of the US terror attacks, despite admitting yesterday that there have been significant decline in government revenues.
"This crisis will test all aspects of our ability as a nation to pull together. We have demonstrated our ability to manage such crisis in the past. This one will not overwhelm us," said Patterson.
The prime minister said, however, that the crisis would require "significant adjustment in the fiscal budget" to deal with the fall in revenues, the need to meet additional expenditure and keep basic services going.
Patterson was addressing the joint Jamaica Bankers Association (JBA), Private Sector Association of Jamaica (PSOJ), and Jamaica Exporters Association (JEA) luncheon yesterday at the Hilton Kingston Hotel.
The prime minister told the business executives that Cabinet was on Monday presented with three scenarios -- best, worse, and mid-range cases -- which would require varying levels of adjustment.
Said Patterson: "The government is in the process of revising the macro-economic programme in accordance with the emerging prospects for Jamaica. In the best case scenario we will have to make some adjustments. In the worse case scenario the resources are going to make us obliged to undertake major and far-reaching adjustments."
He said also that ministers were Monday given the latest update from a technical team of representatives from the Ministry of Finance, the Bank of Jamaica and the Planning Institute of Jamaica, who have been meeting to assess the local impact of the September 11 attacks on the US. Among the findings by the team are:
* A decrease in passenger activity by 28.5 per cent during September 11-30, when compared with the same period last year;
* A decline in daily customs collections since September 11, from an average of $121 million prior to the attacks to an average of $79 million for the remainder of September;
* Expectation that earnings from PAYE will decline consequent on lay-offs in the hotel sector and other industries directly related to tourism.
Patterson also noted that employment in the US had fallen by 199,000 persons and job-less claims have risen to a nine-year high since September. However, he said the job losses have had no negative impact on remittance inflows based on available information to date.
In addition, Patterson said the macro economy remained stable with continued low inflation and a stable exchange rate.
In fact he warned would-be speculators on the local currency of the war chest of foreign currency reserves held by the BOJ, now in excess of US$1.5 billion, while also reiterating the importance of the high reserves in dealing with the threat to the country's foreign exchange earning sectors.
The prime minister told the luncheon that the government would be looking to source external financing to facilitate the recovery. "The financing that will become available must be measured against the overall fallout in the revenue and foreign exchange earnings," said Patterson.