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Finance minister hopeful today's IMF talks are final round

No delay in IMF discussion timetable — Phillips

BY CONRAD HAMILTON Observer senior writer hamiltonc@jamaicaobserver.com

Monday, September 24, 2012    

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FINANCE Minister Dr Peter Phillips is keeping his fingers crossed that talks scheduled to begin today with officials of the International Monetary Fund (IMF) will finally result in Jamaica securing an agreement with the global financial powerhouse.

The deal will allow the IMF to provide oversight for the Government's management of the economy, and will also allow Jamaica to draw down funds in the form of budgetary support from the Fund.

A stamp of approval from the IMF will also make it easier for Jamaica to access loans at more attractive rates from international lending institutions.

Just over a week ago, Dr Phillips told Parliament that Jamaica should be able to ink a deal with the IMF by December.

However, eyebrows were raised last Sunday when People's National Party President and Prime Minister, Portia Simpson Miller, in her address to the party's annual conference, declared that she was unable to say when a deal would be reached.

But in a presentation to journalists last week, the finance minister said he wanted the discussions, slated to begin today, to be the concluding round.

Dr Phillips had been strident in dismissing suggestions that the talks with the IMF are being affected by the Government's failure to agree to key deliverables, including the need to reduce the country's public sector wage bill by laying off workers, and the need to effect reforms to the tax and public sector pensions systems.

"There has been no delay in the discussion timetable. Within two weeks of taking office the administration entered into discussions with the IMF. The first focus was an article four review which we completed in May," said Dr Phillips last week.

He insisted that significant work has taken place on both tax and pension reform, and he stated that the respective white papers will be tabled in a matter of weeks.

He added that the Government was making progress with plans to divest its shares in Clarendon Alumina Partners, an entity that is taking too much from the public purse and one which the IMF feels should be divested, and a deliverable which the previous Jamaica Labour Party Administration agreed to its railroaded deal with the IMF.

The finance minister is also confident that the budget that was tabled earlier this year has begun to achieve the stated macroeconomic objectives.

"It represented a major fiscal effort by the country and, indeed, the people of Jamaica. There were $40 billion of adjustments, expenditure cuts, and revenue-raising measures, and that was, in a sense, the first step in recovering the ground that had been lost during the previous Administration, as far as economic targets were concerned," Phillips explained.

"It is important to record that the targets that were set in the budget for our primary surplus of six per cent GDP are performing better than targeted, as at August 2012. Central government operations generated a fiscal deficit of some $32.6 billion compared to the set target of $36.3 billion. Our expenditure is some 3.1 per cent less than budgeted at this point," added Phillips.

He added that the inflation rate for August was a "reasonable 0.5 per cent". "It is among the best inflation figures we have had for some time. Year-to-date, inflation stands at 3.3 per cent, for the fiscal year-to-date, inflation stands at 1.6 per cent and this is below our own estimates," Phillips argued.

He, however, acknowledged a one per cent fall-off in revenues and grants, and asserted that there will be aggressive efforts by the Customs Department as well as the Tax Administration Department to increase collections.

Regarding the deteriorating Net International Reserves (NIR) the finance minister acknowledged that there has been some pressure, but asserted that the NIR remains strong.

"The main factor behind the deterioration in the NIR is really the consequences of us being unable to access flows, because the prior Standby Agreement with the IMF went awry. There is some some $US400 million which the Government is unable to access," said Phillips.

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