IMF Talks Result In Greater Understanding of Priorities – Finance Minister

The just concluded five-day preliminary talks between the Government and the International Monetary Fund (IMF) have resulted in greater understanding of the priorities of the administration, and provided an updated assessment of the country’s current economic position, setting the stage for early negotiations of a new Fund programme.

This was stated by Finance, Planning and the Public Service Minister, Hon. Dr. Peter Phillips, during a press briefing at the Ministry’s Heroes Circle offices in Kingston, today  (January 24).

The team from the Western Hemisphere Department of the IMF, consistent with the requests made by Dr. Phillips, shared with the authorities concerns about the vulnerabilities of the Jamaican economy, against the background of higher risks from lower growth in the world economy, as well as current realities in Jamaica.

The major issues included a reduction in the primary surplus of the central government that was targeted for this fiscal year, and a rise of the overall deficit of the public sector.  

Based on current projections, the primary surplus would be some 1.5 per cent of the Gross Domestic Product (GDP), below what was targeted in the Budget. This, the authorities agreed, is an unsustainable position that would lead to a worsening of the country’s already burdensome national debt.

In that context, the Fund was given a clear exposition on the priorities of the new government and its commitment to pursue strong policies that would enable Jamaica to address the risks posed by both the global environment and the worsening fiscal realities.

“We recognised that there has been a worsened economic situation in the medium term, which has increased significantly Jamaica’s vulnerability to economic shocks. We have agreed that these problems need to be addressed urgently and we have mapped plans for continuing discussions with the IMF Mission, with a view to ultimately begin negotiations in the not too distant future, and concluding, as best we can, a set of understandings and an agreement (for) a programme,” the Minister stated.

He disclosed that as a first step, Cabinet will be briefed during a retreat next week. “Following that, it is hoped that a team from Jamaica will be visiting Washington to meet with the IMF and other multilateral partners in February, in order to undertake a more detailed analysis and to, hopefully, begin negotiations with respect to a Fund Programme,”  he added.

Dr. Phillips reiterated the Government’s view that an effective programme with the IMF as well as robust partnerships with other international financial institutions, are essential elements in maintaining confidence domestically and internationally, while undertaking the necessary economic reforms.  

Meanwhile, the IMF team restated its willingness to support the authorities in the pursuit of macro-economic stability, sustainable growth and job creation.

By Allan Brooks, JIS Reporter