Gary Spaulding, Senior Gleaner Writer
Although the Inter-national Monetary Fund (IMF) team in Jamaica has given its support to measures outlined by Finance Minister Dr Peter Phillips, it appears that one major hurdle stands in the way of the finalisation of an extended fund facility that would make US$750 million available to Jamaica over the next four years.
"The programme that we discussed will be supported by US$750 million, but this is not the currency under which the IMF operates," said mission chief of the IMF team to Jamaica, Jan Kees Martijn.
"We use special drawing rights (SDRs) and under those terms, it would be about US$480 million, which is equivalent to 175 per cent of Jamaica's quota in the IMF … different metrics to express the same number."
With the announcement of tax measures and the new National Debt Exchange programme out of the way, there are indications that the need to hammer out an agreement with trade unions representing public-sector workers demands urgent attention in order to facilitate a March sign-off of an IMF deal.
When the question was put to Martijn by journalists at a joint press conference by the Ministry of Finance and the IMF mission team yesterday, he confirmed that this aspect of the IMF requirements had to be completed.
"Prior actions are measured by the fact that they should be in force before the (IMF) board meeting, and that is true for all prior actions," said Martijn. "The minister (Phillips) has listed what the prior actions are, so the process is the board meeting is held after the prior actions are implemented," he said.
Earlier in the press conference, Martijn had announced that the IMF mission had reached a staff-level agreement with the Jamaican Government on a policy programme that could be supported by a four-year arrangement on the IMF extended fund facility.
"The process will be reviewed by the IMF management and then the IMF board will consider it subject to the timely implementation of prior actions," said Martijn.
Phillips was quizzed during the press conference about the status of the negotiations. "Good," he responded. When asked to elaborate, Phillips added "active".
Several public-sector groups, including the police and nurses, are rushing to convene meetings in the aftermath of the presentation by Phillips in Parliament, unveiling a new tax package as well as other prior-action requirements set by the IMF.
Phillips said the board meeting is expected to be held in March to pave the way for the first drawdown.
However, Martijn was not able to divulge the value of the first drawdown. "We have the broad amounts, but I am not sure of the exact amount at this point," he said.
Martijn said it was important that the Jamaican authorities announced a debt-exchange programme. "That, along with fiscal adjustments and structural-reform measures, will help reduce Jamaica's financing needs and contribute to debt sustainability."
Added Martijn: "In addition to additional support from international financing institutions and other agencies and other creditors, the success of the authorities' programme will depend critically on a high rate of participation of private creditors in the debt exchange."