The Government is close to reaching a deal with the International Monetary Fund (IMF), with Finance and Planning Minister, Dr. Peter Phillips, stating that discussions with the technical team “are virtually at an end”.
Dr. Phillips, in a statement issued on Saturday, said that talks have intensified over the last two months, with the visit of senior officials to Washington, and the negotiating team worked throughout the Christmas period, with e-mail and telephone exchanges with Fund staff as recently as December 28.
The Minister said that while his objective at the outset was to have brought the negotiations to a satisfactory conclusion by the end of December, the Government remains committed to arriving at an arrangement that is mutually satisfactory to Jamaica and the IMF board.
He said that the agreement reached must be in the best interest of Jamaica and provide protection for the most vulnerable.
Dr. Phillips pointed out that the time that is being taken to reach an agreement is not unusual, as there are “complex and weighty issues at stake, which will determine the future prospects of our country”.
These include measures to halt the debt; raising economic efficiency in both the private and public sectors; and creating the conditions for self-sustaining growth. There has also been extensive exploration of the size, range and scope of the public sector and all the elements that contribute to the persistent fiscal deficits including the tax policy, staff costs, interest costs, procurement and cash management, capital expenditure, and how best to protect the most vulnerable.
Dr. Phillips said that even where there is agreement in principle about what has to be achieved by the end of the first year of a programme, there is an instinctive insistence on the part of the IMF that as much as possible should be done up front.
“The Government has therefore invested great effort in advancing pension reform, wage negotiations, reducing the effective size of the public sector establishment, tax administration, introduction of a centralised treasury management system and various pieces of enabling legislation such as the Public Debt Management Act and regulations governing the Fiscal Responsibility Framework,” he informed.
He said that while the discussions with the Fund’s technical staff are almost concluded, there are still some remaining issues that have to be settled.
These are: the approach and timetable for a comprehensive policy on tax waivers and incentives; and safeguards against fiscal slippage in this fiscal year and the examination of even higher primary surpluses, in the medium-term, to underpin targets for debt reduction.
Dr. Phillips said that following conclusion of the negotiations, there will be prior actions to be undertaken subject to the approval the Cabinet and the necessary consultations with local stakeholders. The completion of these will determine the timing of the IMF Board’s approval.
The Finance Minister, in his statement, placed the country on notice that the continued implementation of economic reform is going to require commitment and sacrifice by all Jamaicans.
“Progress along this pathway will require fundamental changes in our normal operational patterns. We will have to be more efficient and more diligent in how the state operates and how we facilitate investors in order to create the better jobs and higher levels of economic growth, which together promise a better future for Jamaica and its people,” he said.