Minister of Finance and Planning, Hon. Dr. Peter Phillips, says Jamaica’s relationship with the International Monetary Fund (IMF) stands at the centre of the country’s economic recovery programme.
He said the country’s economic interests, at this time, are best served by entering into an agreement with the IMF covering an extended period of at least three years.
The Minister was speaking during the opening of the 2012/13 Budget Debate in the House of Representatives on Thursday (May 24), under the theme: ‘A New and Binding Covenant for Stability, Equitable Growth and Prosperity’.
He said Jamaica must take immediate steps to restore its trustworthiness with international financial institutions and “rebuilding trust requires that we begin implementing a credible programme of fiscal discipline as a matter of urgency.”
Dr. Phillips noted that to this end, the government arranged a number of meetings with the IMF since taking office, the first of which was held within the first two weeks of the swearing in of the new administration.
Since then, two visits have been made to Washington D.C., the first in February by the Minister to meet with Managing Director, Christine Lagarde and the second in April by a technical team to advance the discussions. An IMF team completed an Article IV exercise last month.
“Through these meetings, we have made substantial progress towards full re-engagement with the IMF,” Dr. Phillips told the House. He noted that in the course of these discussions, “we have availed ourselves of the freely offered technical resources of the IMF as we have focused on the critical areas of enhancing tax administration and work on the technical underpinnings of overall tax reform”, which includes the reform of the system of tax incentives and tax waivers.
He further noted that the government’s dialogue with the institution to date has been more than a negotiation, “as we seek to craft a macroeconomic programme that will balance the urgent need to tackle our greatest vulnerability, the debt”.
He said the government must achieve this while simultaneously engaging in a reform programme that will unleash the creative and productive energies of Jamaicans, and protect the most vulnerable in the society at the same time.
The Finance Minister contended that through the exercise of fiscal responsibility and the adoption of structural reforms that will enhance the external competitiveness of Jamaican businesses in the long- term, it is possible for Jamaica to break the cycle of low growth.
These reforms, he said, span fiscal consolidation, comprehensive tax policy, tax administration and pension reform. “It’s a big agenda, but it’s an agenda that we need to tackle, one by one, if we are to secure the future of the Jamaican people,” he remarked.
Dr. Phillips said the government will also have to undertake measures to improve the business environment, reduce energy costs, and enhance social protection for the most vulnerable and marginalised in the society.
By Athaliah Reynolds-Baker, JIS Reporter