Phillips firm on IMF wrap-up

Steven Jackson, Gleaner Writer

Minister of Finance and the Public Service Dr Peter Phillips yesterday reaffirmed his commitment to wrap up negotiations for a new International Monetary Fund (IMF) agreement by September.

The IMF - a funding organisation comprised of 188 nations - should then make a determination by December, Phillips told media and stakeholders during a Gleaner Editors' Forum held yesterday at the newspaper's North Street, central Kingston, head office.

"We will have, what I expect to be, concluded negotiations by the 25th of September when the IMF team comes here. So there is no delay in the programme discussions," said Phillips.

He later added: "The team is coming September and I expect to go to the board before the end of the calendar year."

Opposition concerned

Earlier this month, the Opposition raised concerns over the apparent delay in the pending IMF deal.

The previous Jamaica Labour Party administration in 2010 entered a 27-month, US$1.27-billion standby agreement with the IMF. Within a year, however, the agreement was falling apart based on missed and adjusted fiscal and tax-reform targets.

The economy recorded flat growth over the first six months of 2012, which severely trails leading regional economies in Latin America. Phillips stressed that reducing the island's debt as a per cent of gross domestic product (GDP), currently at some 130 per cent, remains critical to allowing the country increased gross prospects. The Government proposes by March 2016, under its Fiscal Responsibility Framework, to balance the Budget and reduce the public-sector wage bill to nine per cent of GDP and the public debt to 100 per cent of GDP.

Phillips, however, stated that the Government would continue to meet its J$1.7 trillion debt obligations and avoid default.

"It would have a tremendous impact on the financial health of your domestic financial system. So you would end up spending more to preserve the health of your financial system than you would save in the reduced interest payments if you were to default," he said of that strategy recently undertaken by Belize.

steven.jackson@gleanerjm.com