Minister of Finance and the Pubic Service, Hon. Audley Shaw, has assured the country that the application process for the US$1.2 billion standby facility Jamaica is seeking from the International Monetary Fund (IMF) is “running fairly smoothly”.
Addressing a Scotia DBG’s Corporate Investment Seminar at the Terra Nova Hotel, Kingston, on Thursday (October 22), Mr. Shaw said that discussions with the IMF’s top executives, some of whom he spoke with recently in Inbstanbul, Turkey, have been “very productive”.
“Since that time, we have been doing our fine-tuning here in Jamaica, in terms of the medium term programme. The IMF is expected to be here with us next week, when we will continue to dot the ‘I’s’ and cross the ‘T’s’,” he expanded.
Alluding to Jamaica’s revenue and foreign exchange earnings fallout, consequent on the global economic downturn, Mr. Shaw contended that the administration would have been “fiscally imprudent and absolutely irresponsible” not to have applied to the IMF for support.
Minister of Finance and the Public Service, Hon. Audley Shaw (left), fielding questions from participants at a Scotia DBG Investments’ Corporate Investment Seminar at the Terra Nova Hotel, Kingston, on Thursday (October 22). Seated at the head table is Scotia DBG’s Vice President in charge of Sales and Service, Vanessa Reid-Boothe.
“Having regard to that level of fallout in foreign exchange earnings and revenue, and the fact that you need to keep (the) Net International Reserves (NIR) at a credible level to be able to acquire the goods that you need to run your country, whether it’s oil, food or other things, it would be fiscally irresponsible for us not to have joined over 60 other countries who have applied to the IMF for standby support,” he said.
“We can’t afford to be fiscally irresponsible. We have already received US$330 million from the IMF, which helped to bring the NIR up to almost US$2 billion,” he emphasised.
Mr. Shaw reiterated that while Jamaica had access to some US$1.2 billion in special drawing rights, through the IMF standby facility, it didn’t necessarily mean that the administration would be using all of the funding.
“It’s there to the extent that we need it to support our operations”, he said, while pointing to the benefits that would accrue to Jamaica from entering an agreement with the IMF.
“The IMF agreement, importantly, will open up doors to the other multilateral institutions for additional funding in policy-based loans, project-based loans and emergency fiscal support loans, if it becomes necessary,” he said.
The Finance Minister also pointed out that, since assuming office, the current administration has secured US$1 billion in funding commitments from multilateral agencies, while drawing down some US$700 million.
“There is more in the pipeline. For this fiscal year, at least US$500 million is tied up with the multilaterals, other than the IMF, awaiting the IMF agreement. That’s how important that IMF agreement is, because it frees up other funds at relatively cheap interest rates,” he added.
Mr. Shaw also reaffirmed the administration’s commitment to establishing fiscal responsibility laws to place caps on deficits and debt, as a percentage of the Gross Domestic Product (GDP).
“It still is the objective of the Government to put in place a fiscal responsibility framework, first of all. As a matter of fact, the Cabinet, only a few weeks ago, actually signed off on a fiscal responsibility framework. The next step is that we have sent it to the Chief Parliamentary Counsel, to now put together a framework for a fiscal responsibility Act,” Mr. Shaw outlined.
He added that it was one of the planks on which discussions with the IMF and other multilateral agencies would be undertaken.