PM Says IMF Talks Not Shrouded in Secrecy

Prime Minister, the Hon. Bruce Golding, says there is no secrecy surrounding the discussions between the Government and the International Monetary Fund (IMF) on the conditionalities of the US$ 1.2 billion loan facility the Government is seeking.
Mr. Golding said that a number of factors will determine the conditionalities Jamaica will face under the agreement. These considerations include the country’s large debt consuming a significant portion of each dollar spent, the ability to achieve fiscal deficit targets and the insufficient external account.
The Prime Minister was speaking to journalists at Wednesday’s (July 29) post-Cabinet press briefing at Jamaica House.
He said that the focus of the discussions will be on fiscal targets.
“We set a target of 5.5 per cent for this year. What are we going to do to achieve it, when the revenues on which that target was based are underperforming? Up to the end of June, we were 11 per cent below projections. We were 7 per cent below last year. That’s a huge fall-out,” he conceded.
“You make up that either from additional revenue sources and measures – which I don’t think is a possibility, I don’t believe that the country has the capacity to cough up any more revenues – or you do it from expenditure accounts,” he added.
The Prime Minister said this is where the emphasis will be, but insisted that the IMF would not dictate where the cut-backs are to be made.
“The IMF has agreed with us that the social safety net, at all costs, must be protected. We cannot afford to move resources from the security forces; we cannot afford to cut resources from education. I am not going to be prepared to allow any cut in the resources for health. Everything else will have to help us to bear some of the burden,” he said.
Mr. Golding pointed out that, whether or not there is an IMF intervention, the country would have had to get its fiscal target back in line.
“At 5.5 per cent, you are close to the limit of what the financial market in Jamaica is able to finance, it cannot finance unlimited deficit. In addition to that, the more deficit we ask the financial community here to finance, is the higher the interest rates, and we have to get those interest rates down, not only to get businesses to survive this crisis, but also to help those businesses that may be able to find opportunities, even in the midst of the crisis, to expand or to go into new ventures,” he said.
The Government expects to complete the preparatory work and documentation for the agreement with the IMF by mid-August, and to make a formal submission to the Executive Board of the Fund in September.
Mr. Golding said some 90 per cent of the details of the agreement have been ironed out, and assured that the Government wants to make its final decision based on consultations.