The Government will consider a number of options, including a Staff Monitored Programme, during the upcoming negotiations with the International Monetary Fund (IMF) for a new agreement.
This was disclosed by Minister of Finance and the Public Service, Dr. the Hon. Peter Phillips, during an interview with JIS News, Thursday Jan. 26.
“Nothing is off the table, except that we want to have an agreement that will build confidence in the investment community and among all stakeholders,” the Minister explained.
Providing clarification with respect to the need for further balance of payment support from the Fund, the Minister said that while the country does not have a pressing balance of payment problem at this time, any new IMF agreement will serve to enhance investor confidence and generate the release of other funds from the country’s bi-lateral and multilateral partners.
“We don’t have an urgent balance of payment problem and the IMF lends money primarily for balance of payment support. That is not what drives us, even though we certainly need some support, and that (support) won’t be triggered, unless we have a good IMF programme for the most part, neither from our multilateral partners, nor from our bilateral partners,” he explained.
The country’s multilateral partners include the World Bank, the Inter-American Development Bank (IDB), and the Caribbean Development Bank (CDB). Jamaica enjoys bilateral relations with sovereign states and jurisdictions, such as the European Union.
According to Dr. Phillips, the technical work which the Ministry and its agencies are undertaking, will inform the negotiations and the choice of an appropriate option.
“We are going to enter the negotiations with the IMF and we have a range of options available to us, including a staff monitored programme. We are going to look at the options when the negotiations get to that intensive stage, but much more technical work needs to be done…looking at the projections going forward,” he stated.
With respect to the lingering economic challenges facing many European countries as well as the slower than expected recovery of the US economy and the rest of the developed world, the Finance Minister acknowledged that those developments would pose challenges to the Jamaican economy.
"It's clear from the report of the IMF and the Management of the World Bank, that they are projecting slower growth for the world economy… that will create difficulties for Jamaica. It might mean lower demand for some of our exports; it might mean slower remittance of earnings from Jamaicans overseas…depending on their personal situation,” he said.
The Minister said that with the challenges posed by the prospect of a deepening global economic downturn, it is critical for the country to find ways to grow its economy.
"Overall, we will have to redouble our efforts to export more, to seek new markets, particularly in areas that are not as affected greatly by the recession; we will have to try and source investment funds from other places that are not going to be as affected by the recession as the United States and Europe," the Minister said.
He further explained that it will also mean tighter expenditure and a more prudent management of the country’s financial resources.
"It means that we will have to manage our resources… reduce waste and spend only what we are able to secure through revenues, because we have to sustain stability in the economy and reduce the debt, so that we can get out of this debt trap that is slowing down our capacity to grow as a country. It will be difficult in the near term, particularly if the recession is a deep one, but I think in the end, we can lay the foundation for a better future for all our people," Dr. Phillips said.
With respect to the extent to which expenditure cuts will be reflected in the soon to be rolled out Supplementary Estimates, the Minister explained that it is early days yet. “We can’t say at this time, but thankfully, we are close to the end of the fiscal year, so I think that even as we cut, I don’t expect too much disruption to the activities that are going on,” he said.
“We would rather expand than cut, but we have a responsibility to the country and most of all to our children’s future, to ensure that Jamaica has a strong economic foundation going forward, and we can’t build that foundation on just borrowing money to meet our basic expenses,” the Minister emphasised.
By Allan Brooks, JIS Senior Reporter