A team from the International Monetary Fund (IMF) is to visit the island from March 7-20 to conduct an Article Four review, which will serve as the start of formal negotiations of a new agreement with the Government.
This was disclosed by Minister of Finance and Planning, Hon. Dr. Peter Phillips in a statement to the Houses of Representatives Wednesday Feb. 29at Gordon House.
Dr. Phillips who visited Washington D.C and New York during the period February 14-17 for discussions with the IMF, World Bank and the Inter American Development Bank (IDB), said the IMF has expressed a willingness to work with Jamaica to develop a new programme.
“I need to state that while the administration recognises that difficult fiscal adjustments to the budget will have to be made, we are absolutely committed to the preservation of those social programmes necessary for the protection of the most vulnerable and disadvantaged groups in the society,” Dr. Phillips stated.
He added that the fiscal programme of the previous administration had “gone off track disastrously” during the second half of 2011 and that there needs to be a strong effort which is reflected in the Supplementary Estimates to bring the programme back on track.
“In terms of the debt to Gross Domestic Product (GDP) ratio, I restated the Government’s commitment to see the ratio fall from approximately 130 per cent of GDP at the end of March 2012 to about 100 per cent in the medium term,” Dr. Phillips said.
“We agreed that the initiatives to enable the economy to grow, to create jobs and to improve competitiveness are crucial imperatives as the medium term objectives cannot be met by fiscal efforts alone,” he added.
In the meantime, Dr. Phillips said the IDB was concerned about Jamaica’s fiscal and debt situation as at December 31, 2011.
He noted that the government has sought to assure the IDB management and some members of the Board of the IDB of the need for the new administration to be given the opportunity to set out its policy approach, which includes a new programme with the IMF.
The Finance Minister also informed that for its part the World Bank has acknowledged the need for Jamaica to reach an agreement with the IMF and reiterated its commitment to providing technical assistance in areas such as pension reform, social protection programmes and Information and Communication Technologies development.
He also noted that the most significant obstacle in the discussions with the Washington-based institutions was the “loss of credibility” that the country is facing due to the failure of the previous administration to carry through the commitments made under the IMF Standby Agreement.
In his remarks, Opposition Spokesperson on Finance, Audley Shaw denied that there has been a break down and a loss of credibility with the multilateral institutions due to the failure of the previous administration to carry through commitments made under the IMF Standby Agreement.
He also queried when process to undertake tax reform will be completed as well as the sale of Clarendon Alumina Partners (CAP).
In his response Dr. Phillips said in relation to the Standby Agreement that had been entered into there were two reviews that were successfully completed.
“There were six reviews to be done, the others were not successfully completed and by the end of the programme there had been no discussions surrounding the programme for close to eight months. I am not trying to blame (the previous administration) I am just simply stating a matter of fact. I am saying that Jamaica has to do much to restore its credibility with the multilaterals and generally in the market place in relation to the agreements entered into and not concluded,” Dr. Phillips said.
In relation to the tax reform, the Minister said he hopes to have the policy document prepared before the finalisation of the 2012/13 budget.
“This means that the committee on tax measures that is meeting right now will not have an extended period for further public discussions. We will have to hear the groups presenting those submissions and then we would have to prepare a report from the committee and hopefully get the concurrence of the House,” Dr. Phillips said.
In relation to CAP Dr. Phillips said the government has had discussions with Alcoa and the prospective purchasers.
“We are still pursuing the discussions. Alcoa was here last week, Glencore was here earlier and I expect them to come again. So those discussions are proceeding but again I cannot give you at this point a timetable because of when that will come to conclusion,” the Finance Minister said.