Gov’t Wants New IMF Agreement Soon

Minister of Finance, Planning and the Public Service, Hon. Dr. Peter Phillips, has said the Government wants to enter into a new agreement with the International Monetary Fund (IMF) in the shortest possible time.

“These negotiations are going to be tough. But based on the discussions, I can say we know what we have to do to get discussions about an agreement started,” Dr. Phillips said.

Speaking in the House of Representatives on Tuesday (January 24), Dr. Phillips said any new agreement with the IMF will be based on credible, predictable and achievable macro economic targets that will inspire confidence among local and international investors, as well as other stakeholders.

“Let me make it clear that, in the medium-term, any programme going forward must involve comprehensive tax reforms, reform of the public sector pension system, public sector transformation, and a moderation of the growth in public sector cost, which is allied to economic growth,” he stated.

Dr. Phillips further noted that as the government charts the way forward, macro- economic stability has to be maintained and must include low inflation and low interest rates.

“Macro-economic stability is not an end in itself; there is stability now. But there is also low demand for credit and foreign exchange due to the weakness in the economy. Banks are competing vigorously to lend and in doing so, are lowering interest rates. Even so, borrowers are not yet receiving the full benefits. The banking sector needs to assist further by taking active steps to contain their costs, increase their efficiencies, and so, reduce their spreads,” he argued.

In the meantime, the Finance Minister will be tabling supplementary estimates for the 2011/12 fiscal year in February, which will reflect a downward revision in public expenditure.

He noted, however, that cuts in expenditure are not a sustainable medium to long term measure to finance the operations of the government.

"We will be required to identify opportunities to generate increased revenues, which must be within the context of the promotion and inducement of growth in the Jamaican economy,” the Finance Minister stated.

By Latonya Linton, JIS Reporter