Tuitt returns from IMF meeting in Tokyo – Cutting cost is good but not at the expense of growth

POSTED: 10/18/12 12:20 PM

St. Maarten – Just back from the 2012 Annual Meeting of the International Monetary Fund (IMF) and the World Bank in Tokyo, Japan, Finance Minister Roland Tuitt believes that his attendance yielded positive results and has also widened the government’s treatment of macro-economic policy.
“An important point that came out is that formally governments used to go on the tracks of cutting cost; that is the best measure to do. But it seems now that from this and studies that have been done, cutting cost is good but it cannot go at the cost of growth. So if you are going to cut cost, you have to make sure that you put things in place that are going to compliment it to promote growth. That is one issue that we in our small country St. Maarten have to take into consideration, when we are preparing our budget and our strategies to move government forward,” Tuitt said at yesterday’s Council of Ministers press briefing.
During the IMF meeting from October 12 to 14, Tuitt held bilateral talks with the international funding agency so that the government can make use of its technical assistance as well as that of the World Bank.
Tuitt also found the meeting’s final position interesting.
“The conclusion is that the first lesson is that fiscal consolidation efforts need to be complimented by means that support growth, structural issues need to be addressed and monetary conditions need to be supported as much as possible.”
The Ministry of Finance also engaged in bilateral talks with Caribbean nations Barbados and the neighboring Federation of St. Kitts and Nevis.
“We spoke to them on how we can work together and exchange information and what lessons we can learn from them. They are willing and in the case of St. Kitts provide information on how funds can be accessed internationally.”
The Bridges Weekly Trade News Digest yesterday reported that “The protracted global financial crisis dominated the agenda at last week’s International Monetary Fund (IMF) Annual Meeting in Tokyo, Japan, as new data showed that economic growth is likely to be even lower than anticipated this year and next. As officials debated how best to boost growth while addressing macroeconomic imbalances, the controversial topic of rich countries using further quantitative easing to boost their job markets – a practice slammed by many emerging economies as putting their own exchange rates and trade at risk – featured prominently during the high-level discussions.
Ahead of the Tokyo meetings, the IMF released more pessimistic economic and trade growth forecasts for 2012 and 2013 than it had projected in July. Economic growth is now slated to reach 3.3 percent this year, down from the earlier estimate of 3.5. Next year, output is expected to expand by 3.6 percent, down from the previous prediction of 3.9 percent.
“The crisis in the euro area remains the most obvious threat to the global outlook,” the IMF cautioned in releasing the estimates. “Despite recent improvements, global imbalances and the associated vulnerabilities are likely to remain well above desirable levels unless governments take additional, decisive action,” the Fund warned, adding that “no significant improvement appears in the offing.”
Apart from seeking technical assistance, there are many in the country who believe that St. Maarten should not reach out to the IMF for funding, largely because of the catastrophic effects such agreements had on other developing nations in the Caribbean.

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