Phillips in Washington as Statin reports Jamaican economy contracts
Finance Minister Dr Peter Phillips and his troupe of advisers are now in Washington but the announced talks with the International Monetary Fund (IMF) should not be taken as a sign that the actual negotiations for a new bailout programme have begun.
"It's the continuation of discussions," said a ministry source, stressing the latter word. "I wouldn't use the word negotiation."
Other insiders say the ministry believes that the budget crafted by Phillips - which has been vilified by Kingston pundits as too much austerity and not enough punch to stimulate growth - alongside other developments, gives the Jamaican contingent sufficient leverage to convince the Fund that Jamaica is positioned to begin negotiations.
Still, the mission is happening just as the Bank of Jamaica is reporting another monthly decline of net reserves, from US$1.72 billion at the end of May to J$1.54 billion at the end of June. Additionally, Statin, the final arbiter on economic growth, released first-quarter GDP numbers which showed that the economy contracted at an annual rate of 0.1 per cent in the period ending March, and contracted 0.5 per cent relative to the December 2011 period.
"This performance was the result of declines in the goods-producing and services industries which fell by 0.2 per cent and 0.1 per cent, respectively," Statin said. The most significant declines included were mining and quarrying, down 5.0 per cent; construction, 5.6 per cent; and transport, storage and communication 3.1 per cent.
Agriculture expanded by a substantial 6.5 per cent while manufacturing grew at a more docile pace of 0.5 per cent.
The Statin data supersede the Planning Institute of Jamaica's estimate of 0.6 per cent growth for the quarter.
The trip to Washington includes a meeting with Jamaica's primary multilateral financier, the Inter-American Development Bank, from which Jamaica expects to draw down US$41.38 million of funding this year; as well as with Leonardo Martinez-Diaz, the deputy assistant secretary for the Western Hemisphere in the US Treasury Department.
Wednesday Business was unable to confirm whether America's taxpayer tracking law, FATCA, was up for discussion with the Treasury official; however, the ministry "feels it will likely come up". Phillips has previously advised that Jamaica would consider exploring a bilateral arrangement with the US government over FATCA, which would free the banks and other financial institutions from having to enter into individual agreements to the Internal Revenue Service on accounts held by 'US persons'.
Phillips and his team will head to New York from Washington for meetings with rating agencies and investment bankers for an update on the country's economic performance. Phillips plans to raise US$45.13 million on the international capital market this fiscal year.
The group returns to Jamaica on Friday.