Wed | Jan 23, 2019

Phillips to EPOC: Election, wage settlement won’t derail IMF programme

Published:Friday | June 12, 2015 | 12:00 AMMcPherse Thompson

The Government remains committed to meeting the targets under the four-year economic support programme with the International Monetary Fund (IMF) and has pledged that neither a general election nor a settlement on public-sector wages will derail it.

The pledge was given by Finance and Planning Minister Dr Peter Phillips earlier this week to members of the Economic Programme Oversight Committee (EPOC),

co-chairman Richard Byles said.

Phillips, who was invited to and attended the EPOC meeting, "gave us a pledge that he would not vary from his commitment in respect of the four-year IMF programme and targets embedded in that, whether it's general elections or the wage negotiations," Byles said.

"He gave his pledge to EPOC that he and the Government remain firm that they have to meet the programme targets."

Byles, addressing a press briefing on the 25th communiquÈ of the private sector members of EPOC, said if the Government overspends in the upcoming general election due in the next 18 months - as governments are wont to do - then it might not meet the primary surplus target and hence fail IMF tests.

Similarly, "If we go beyond a certain amount, in respect of the wage settlement, we could also find ourselves in a difficult position to recover and meet the primary surplus target," he said.

Phillips also told the EPOC meeting that the Government anticipates a positive IMF review of the eighth quarter reform programme, which, coupled with the recent upgrades of Jamaica by Standard & Poor's and Moody's Investors Service, meant that Jamaica has made remarkable progress. But he is also said to have noted that the economy remains fragile and external events could have a dramatic effect on economic growth.

The finance minister also noted that public-sector transformation was the next big structural challenge and that it would begin in earnest this fiscal year, Byles said.

The EPOC co-chairman said the IMF board is expected to complete the eighth review by 'lapse of time' - that is, without holding a board meeting - and is expected to issue a statement on the outcome by next Tuesday.

The fifth quarterly review was also approved by IMF executive board without a formal meeting to assess the report of the technical team.

Byles also told the press briefing that measured against the Government's budget, the country produced a primary deficit of $5.9 billion, compared with a budgeted deficit of $6 billion in April, the first month of fiscal year 2015-16.

In the first month of fiscal year 2014-15, Jamaica had a fiscal deficit of $1.3 billion.

The net international reserves at the end of May stood at US$2.4 billion, comfortably in excess of the IMF target for end-June 2015 of US$1.43 billion.

Actual tax revenues for April were $27.1 billion, compared with a budget of $26.8 billion. This means that tax revenues, which fell short of last year's budget by 3.5 per cent, is currently ahead by 1.4 per cent.

Grants, which underperformed budget last year, are again behind budget by $598 million, Byles said. And, just like last year, both operating and capital expenditure also remain below budget.

The EPOC co-chair noted that it will take $9.5 billion more to meet the primary surplus target of $126.7 billion for the current fiscal year and suggested that tax compliance will be important to ensure it is met.

However, he said the Ministry of Finance and Tax Administration Jamaica "are a little more positive this year that they are in a better position to drive the tax compliance challenge than they were last year."