Christine Lagarde, Managing Director of the International Monetary Fund, during her recent visit to Jamaica, strongly disagreed with a recommendation that the country’s exchange rate be fixed, for a limited time, to give the economy “breathing space.”
During an exclusive interview for Television Jamaica’s All Angles, with host Dionne Jackson Miller, her response to that proposal was unequivocal: “No, that will not work! That will not work!”
Elaborating, she said most of the adjustments had already taken place, but insisted that “slight currency adjustments” were still needed. Thereafter, she asserted, “you will see foreign direct investment, you will see tourism numbers pick up.”
Lagarde strongly rebuffed those calling for an immediate end to the devaluation of the Jamaican currency, during her recent visit to the country.
Some members of the private sector and the parliamentary opposition had argued for an end to devaluations before and during her visit.
But in a number of public engagements, the IMF chief pushed back against that urge, and during the All Angles interview she stressed that if devaluation is combined properly with other tools, there will be long term benefits.
Those other measures, she said, include geting the country’s public finances “in order” and carrying out structural reforms that will convince potential investors that Jamaica is competitive and therefore an ideal location for doing business.
“In the long run, when growth has picked up, when inflation has been tamed, then it might well mean appreciation of the Jamaican currency,” she said.
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"That will not work!" - IMF chief on fixed exchange rate for Jamaica
