The stalled and subsequent failure of a series of International Monetary Fund (IMF) tests by the then Jamaica Labour Party administration, under a previous standby arrangement with the fund, are being blamed on the granting of a 'generous' wage package to public-sector workers.
Opposition Spokesman on Finance Audley Shaw told The Gleaner on Thursday that the IMF and the Government had taken disparate positions on a negotiated wage settlement with public servants. He said the Fund wanted the seven per cent wage increase to be paid going forward, while the then administration had decided to pay the seven per cent in addition to arrears.
"Our decision to pay the arrears and not just pay the seven per cent going forward was one of the sticking points," Shaw said, during a Gleaner Editors' forum at the company's North Street headquarters in Kingston.
Jamaica's previous standby borrowing arrangement with the Fund involved a US$1.27-billion payment from the IMF in support of the country's economic reforms. However, the agreement later collapsed due to divergent concrete positions between the Government and the IMF, on the compensation package to public servants.
"Hindsight is twenty-twenty vision. It was a very generous package," said Shaw, adding that while the Government was implementing the wage increase the global financial meltdown occurred.
Shaw admitted that when the Government sought to freeze the seven per cent increase to public-sector workers, the police took them to court and a subsequent ruling was made in favour of the workers.