Jamaica: Andrew Holness expected to continue with Economic Program implemented by Simpson-Miller team

It is highly likely that the incoming prime minister Andrew Holness and his Jamaica Labor Party (JLP) will continue with the current economic program with the International Monetary Fund (IMF) put in place by outgoing prime minister Portia Simpson-Miller and her People’s National Party (PNP) – despite potentially budget-busting campaign promises Holness made in the lead-up to the February 25 elections.

According to analysts affiliated to the highly regarded Economist magazine, despite Holness criticizing the Simpson-Miller administration’s austerity on the campaign trail, the JLP leader “conspicuously refrained from critiquing the country’s program with the IMF to reduce the national debt”.

“Whether the IMF would support Holness’ plans is questionable, given the program’s requirement of maintaining a primary surplus of 7 percent of gross domestic product (GDP). It therefore appears likely that the JLP will continue to manage the economy in a similar way to the PNP,” they suggested.

Holness and the JLP’s presentation of a 10-point plan may have been the critical factor in securing the extra votes needed – especially the offer to exempt those making less than J$1.5 million (US$12,381) annually from income tax (three-quarters of all contributors) – which is an attractive proposition given ongoing austerity under the PNP.

The plan also included a promise to create 250,000 new jobs. At present, unemployment in Jamaica stands at 13.5 percent, and youth unemployment at 38 percent.

Specific projects in the Holness plan include:
– Development of irrigation infrastructure;
– Expansion of agro-parks;
– Building farm roads; and
– Development of an infrastructure program focused on key arterial and secondary roads, bridges, and drainage.

The Ministry of Finance and Planning has already prepared a budget with this primary surplus target in mind. A draft should have been presented to Parliament during February, but was delayed by the elections.

Despite campaign trail rhetoric, there will not be significant policy deviations under the new Holness administration – given the necessity of maintaining economic stability under the IMF program.

Source: Jamaica Observer