It appears the International Monetary Fund (IMF) has welcomed the general thrust of the Jamaican Government’s fiscal programme for the 2012/ 2013 fiscal year.
In a report published a day after Finance Minister, Dr Peter Phillips closed the Budget Debate on Wednesday, the IMF said its directors agreed with the Government’s efforts to increase primary surplus to about six per cent of gross domestic product.
The IMF report was posted by the American news site, Bloomberg.
The Fund says strong fiscal adjustment will add to the credibility of the Government’s programme, while adding that several of its directors supported a balanced pace of adjustment to safeguard the island’s fragile recovery and social cohesion.
The IMF says going forward, continued fiscal consolidation will be needed to secure permanent savings, which will be generated by having sufficient and sustained primary surpluses over the medium term.
It says this will play an important role in assisting to reduce public debt, build fiscal buffers, and create space for social spending and growth-enhancing capital projects.
Meanwhile, in what appeared to be a criticism of the former political administration, the IMF said in the report that it regretted that the successful Jamaica Debt Exchange had not been accompanied by fiscal consolidation to reduce the public debt.
But the IMF report says the current political environment provides an opportunity to address the macroeconomic imbalances and increasing vulnerabilities, adding that the Fund also welcomed the progress made by the Government in developing a comprehensive economic programme.
It urged the Government of Jamaica to make debt reduction, improved growth and competiveness and enhanced social conditions its main concerns.
The IMF also stressed that strong commitment to implementation of the fiscal programme will be important, as the country seeks a new arrangement with the it.