IMF will not pay wage bill
THERE will be no accommodations for public sector wages under a new International Monetary Fund (IMF) agreement, says resident representative Dr Gene Leon.
This is because “an IMF loan does not provide money for salaries, it does not provide money for basic schools, and it does not provide money for roads”, Leon said. “It is to ensure that the country... can continue to meet international transactions.”
Generally, the aim of the IMF is to ensure economic stability and to ensure there is enough financing to facilitate the continuation of international trade, stated Leon on Friday at a forum hosted by the Hugh Lawson Shearer Trade Union Education Institute.
Developing a “parallel track” that will take care of growth and an increase in public sector wages is the only way to address the incompatibility of the impending IMF agreement with an increase in salaries, said the Institute’s president ,Danny Roberts.
“We need to find alternatives,” he said. “We cannot borrow ourselves out of a crisis.”
This would be Jamaica's latest agreement in a 39-year stretch of borrowing from the IMF.
The last meeting required the completion of the Jamaica Debt Exchange and the sale of Air Jamaica before an agreement could be reached.
These “prior actions” increase the likelihood of the success of any programme that would be given to the island, Leon said.
Similarly, “we have some prior actions for this programme that have not yet been discussed and agreed upon”, he further stated, indicating that an agreement might not be reached until next year.
In the meantime, the Government should either reprioritize spending or increasing revenue.
“[Public sector] wages constitute 50 per cent of Jamaica's revenue,” he said, adding that the necessity of this 50 per cent and how it can be reduced if it is found that the amount is unnecessary should be considered.
And while the percentage of wages to overall expenditures is high in Jamaica compared to other countries globally, “we are focused on wages because that’s the easiest thing to tackle, but wages represent one element of the problem”.
“What we have is a structural problem. We need to fix the structure.”
A wage freeze, therefore, will only provide the Government with more time but does not solve the problem, he said.