PM Says Government Close to Resolving Issues with IMF


Prime Minister the Hon. Bruce Golding has assured the country that the Government is close to resolving outstanding issues with the International Monetary Fund (IMF), which will enable the Fund to proceed with its application for a US$1.2 billion standby loan agreement.
Mr. Golding, in a statement to the House of Representatives on Tuesday (November 3), said that the departure of former Governor of the Bank of Jamaica, Derick Latibeaudiere, who had been leading the negotiating team, will not disturb the negotiations.
“With the appointment of Mr. Brian Wynter as the new Governor, the leadership of the Bank of Jamaica is in safe and capable hands,” Mr. Golding said.
He confirmed that a technical team from the IMF is currently in Jamaica, working with the Government on the fiscal, monetary and medium-term economic programme it has presented. Financial Secretary, Dr. Wesley Hughes, is now leading the negotiations on behalf of Jamaica and, the Prime Minister pointed out, “his competence and considerable experience in such matters cannot be questioned.”
Mr. Golding admitted that there are issues still being finalised with the IMF team. These issues involve, primarily, the pace of reduction in Jamaica’s fiscal deficit projections as well as issues related to debt management.
“Our projections, of course, are tempered by the persisting uncertainty as to when the current recession will end and recovery can begin. Every suggested adjustment to our programme has to be carefully worked through to determine, as accurately as possible, the impact it will have and identify the policy measures required to support it,” he said.
“We have every confidence that we are close to resolving these issues to enable our application to be presented to the IMF Board,” he assured the House.
Explaining the reasons for the dismissal of the BOJ Governor, Mr. Golding said that while Mr. Latibeaudiere’s basic salary at the end of October was at $14 million, his total compensation package amounted to $38.3 million, in addition to: a fully maintained motor vehicle; entertainment expenses; medical and life insurance; guaranteed pension; and other benefits given to non-contracted employees.
The Prime Minister said that it was in relation to Mr. Latibeaudiere’s housing arrangements that the contract seemed most “absurd”.
He related that the contract states that the Governor shall be provided with a fully furnished and maintained official residence, inclusive of household and gardening staff and “unlimited expenses for telephone, electricity and water.” It also stated that, in the event that an official residence is not provided, the Governor shall be paid rent for the premises he occupies based on the average rental value determined by two independent valuations.
The BOJ purchased a house in upscale St. Andrew, as an official residence for the Governor, at a cost of $22 million, but the Govenor suggested that the house be sold. In the absence or non-occupation of an official residence the Bank had to revert to paying the Governor rent and maintenance totalling $8.4 million for the house he occupied.
Mr. Golding said that between 2006 and 2008, the Governor secured loans totalling $55.4 million at an interest rate of 5% to build a house in another section of St. Andrew. He added that there were several troubling issues surrounding the loans, including the lack of evidence of a loan agreement with the Bank, a matter which has attracted the attention of the Auditor General.
“Research shows that this exceeds the compensation package for the Chairman of the Federal Reserve Board of the United States,” Mr. Golding commented.
The Prime Minister said that his Government considered the former Governor’s compensation arrangements “unconscionable”, “especially at a time when the country is undergoing such severe financial stress.”
He explained that the Government was committed to the independence of the central bank, but that the re-examination of the governance structure was timely. As a matter of principle, the Government could not continue these arrangements. The Ministry of Finance will be issuing a policy directive to the board, shortly, he said.

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