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Danny Roberts weighs in on the IMF
and its implications for JA
By: Andre’ Burnett
BUSINESS LOUNGE
Much has been said about the International Monetary Fund (IMF) in recent months and one could bet the family farm that much more will be said in the foreseeable future. There are two schools of thought that have emerged out of Jamaica’s decision to return to a borrowing relationship with the multilateral: I. There is no alternative II. The agreement will bring nothing but tough times for the country. Your Money spoke to Danny Roberts recently about his thoughts on the new IMF and his unique perspective on the public sector. Roberts, who is the Vice President of the Jamaica
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ally played quarterly upon fulfillment of stipulations laid forth by the IMF. Roberts mentioned agreements that had been reached between nine countries and the IMF last year. “In all of these countries, whether the objectives are to rebuild international reserves, or to prioritize spending on reconstruction, or to sustain fiscal liquidity, or to prevent capital flight, or restructure banks, the fiscal policy prescriptions are invariably the same,” said Roberts. “That is a reduction of the fiscal deficit either through freezing or cutting public sector wages and pensions, or the removal of subsidies and other benefits.” The mention of public sector treatment is one of grave concern for the IMF wary. Roberts indicated that steps were being taken to prepare the members of his union for the times ahead by discussing the implications with the members and also to promote a neo-Keynesian approach to economic development by promoting certain macroeconomic policies within members and social partners. The inevitability of the return to the IMF seems to have sunk in for most people, but it begins to dawn on anyone with a little foresight that the real issue should be long term facilities to ensure that this is the final trip down this unlit road.
Confederation of Trade Unions, a part time lecturer in International Relations at the University of the West Indies and a labour consultant, spoke firstly of his apprehension of the Stand-By Agreement that will be signed by Jamaica. A Standby Agreement is an IMF lending facility that allows a member country to be financed up to a specific amount. Installments are usu-
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“This is the real issue”, explained Roberts. “Jamaica has to reconstruct a macroeconomic framework that promotes greater production and productivity, one that improves our human capital and enhances decent work and social protection through dialogue, consultation, greater efficiency and a sense of equity.”
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By: Andre’ Burnett
Your Money Insights
The emergence of a Credit Bureau in Jamaica If Equifax sounds like a fax machine add-on, Experian brings to mind an obscure comic book villain and TransUnion couldn’t be anything other than a train company then you probably need a little crash course. “A crash course on what?” you may ask, and the answer would be “The idea of credit reference of course”. Well, the first item on the agenda would be to inform you that the names above are the names of the three Credit Bureaus that operate within the United States
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order to determine an individual’s credit worthiness. An individual’s financial track record becomes a tool in assessing whether an individual qualifies for a loan and under what conditions. In Jamaica and other countries around the world, loan qualification hinges on the possession of viable collateral such as land, building and vehicles. As such, Interest rates are for the most part fixed whether one is a diligent debtor or a person who skirts the issue whenever they can. In a system of credit reference, one’s past financial fidelity becomes his collateral. The idea of being held responsible for past financial conduct is not a new one. Cooperative credit bureaus were known in history from as far back as the mid 19th century but the industry took off after the First World War. They were used to service merchants who prior to that only had their personal knowledge of a buyer as their sole reference. With the new mobilization of the US population after the war, more mobile and widespread reference agencies developed to facilitate the wider dispersion of trade. Simply moving one town over to avoid a credit crunch soon became a lot harder.
providing a service to banks and other financial entities. The service that these companies provide has led to the development of a new culture in the US where individuals think twice before closing an account or defaulting on a loan because of how it will affect their credit rating. The credit bureau or credit reference agency is a “for profit” company that collects consumer credit information from various sources in
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Later on this year, Premier Credit, a company owned by Jamaican expatriate Lennox McLeod, will begin operations as it seeks to become Jamaica’s first credit reference agency. With the crash course out of the way, Your Money will further examine the Jamaican situation with regards to the establishment of a credit agency.
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When Opportunity Knocks! “I think all greatness starts with one saying yes to an opportunity.”- Mike Litman Two important attributes of successful entrepreneurs are an ability to envision opportunities for profit, and a willingness to grasp them as they pass by. It has been said that “If you really want to increase your results you’ve got to start saying yes to more opportunities.” If you’re a budding entrepreneur, how can you prepare yourself for business opportunities, and be ready for take advantage of them at a moment’s notice? Believe in it until you see it The first step is to train yourself to recognize prospective ways to earn money. Some people don’t even realise that the sound they are hearing is opportunity knocking at the door. This is due to their ignorance of changing trends or new ideas. In our fast-paced world where technological advancements quickly make things obsolete, you must keep abreast of what’s in vogue or you’ll be left behind. Then there are those people that may peek through the door when they hear the rapping sound, but then slam it shut in opportunity’s face. Their refusal to jump on board may stem from a fear of the unknown or an inability to see the big picture. You have to become a visionary, believing that the desired outcome is possible before it actually happens.
ent o
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Act on it until you achieve it Even if you understand that earning opportunities are available and believe that they are likely to work, you still have to do what it takes to make the most of your options. Profitable trepreneurs are always prepared be pioneers and do the hard work required to bring new opportunities into fruition. The good news is that to benefit from the breaks that the
world may offer, you don’t have to be extraordinarily talented or wealthy. In his classic, Think and Grow Rich, Napoleon Hill says that to be successful you need “no great amount of intelligence, no particular amount of education, and but a little time or effort.” He outlines four things you must possess in order to be successful: 1. A definite purpose backed by burning desire for its fulfillment 2. A definite plan, expressed in continuous action 3. A mind closed tightly against all discouraging influences including negative suggestions of relatives, friends and acquaintances 4. A friendly alliance with one or more persons who encourage one to follow through with both plan and purpose Put simply, to move opportunity from your doorstep into your house you have to be clear and passionate about what you want to achieve, make a plan how to get it, persist despite all the setbacks that will discourage you, and create a network of people that can help to you get what you want.
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Listen up! The sound of success might just be tapping at your door. Will you heed it or ignore it?
Cherryl is a financial consultant and coach, and founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallysmartonline. com. Email Cherryl at advice@financiallysmartonline. com. Please add this address to your email address book in order to ensure you receive a response.
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AN ENTREPRENEUR’S LIFE
by: Cherryl Hanson Simpson
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10 Smart Steps to: Invest in Real Estate
Question: I already own my own home,
but I want to purchase another property since it’s a buyer’s market right now. I need some advice about the right way to buy real estate for investment purposes.
Raise Your Financial IQ! -
7. Don’t deplete all your savings. Real estate transactions can take several months to complete in Jamaica, so it might not be easy to get back your cash in the event of an emergency.
Like any other investment, you should buy real estate with the intention for it to increase in value in the future when it can be sold at a higher price, and/or to provide an income stream. Here are some tips to help you invest wisely in real estate:
1. Think about your investment objectives. Are you
trying to make a short-term gain, or are you planning to invest for the long-term? Do you need a constant income stream or are you more concerned about the growth in the value of the property?
2. Select a strategy that suits your goals. If you
have a long term plan, you could buy land or invest in an area that is expected to improve in the future. For quick profit, you could renovate a fixer-upper for resale. If you need income, you could look for properties with high rental demand.
3. Know the transaction charges. Along with the
10-15% deposit, you will need funds to pay for various closing costs. Email advice@financiallysmartonline.com for a calculator that can help you to keep track of the various charges.
4. Consider the recurrent expenses. Ensure that
you can afford costs such as mortgage payments, peril and home insurance premiums, strata fees, property tax, repair costs, and maintenance and security fees.
5. Decide on your sources of financing. If you’re
borrowing money, you should calculate if the interest costs are justified by the rental income and/or increase in property value. If you pool money with others to purchase, think about the legal considerations of joint ownership.
6. Consider the effects of another mortgage. The
payment will be a new monthly expense on your budget, and it could affect your ability to attain loans for other purposes. If the rental income will pay the mortgage, make an alternate plan if the ten-
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8. Find expert advisors. Get help from profession-
als to find the right location for your investment, and to determine if the property will require costly repairs that are not immediately obvious.
9.
Hire a knowledgeable lawyer. Proper legal advice will ensure that the sale agreement protects your time and money, and can also help you to draft an appropriate rental agreement.
10. Commit your time and effort. If you want to be a successful real estate investor, develop your skills in negotiating, basic accounting and property maintenance; and continually keep abreast of industry developments.
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Financially S.M.A.R.T. Services is Jamaica’s number one source for practical, down-to-earth and independent answers for all questions relating to personal finance. Get more money smart advice at www.financiallysmartonline.com. Email advice@financiallysmartonline.com with comments or questions.
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