THE Government is positive about the results of its first test under the new Extended Fund Facility agreement with the International Monetary Fund (IMF), which will be announced by Finance Minister Peter Phillips at a press conference this morning.
However, Leader of the Opposition Andrew Holness yesterday urged caution, saying the passing of the first IMF test is never normally in doubt.
"Tomorrow, the minister of finance will come and say that we have passed the first IMF test. That is not going to be news. It would be a disaster if you did not pass your first test. But, what will happen with the tests to come?" Holness questioned as he addressed a Jamaica Labour Party (JLP) scholarship awards luncheon at the Spanish Court Hotel in New Kingston.
Holness, warned that interest rates were starting to creep up again, suggesting that the Government was once more resorting to its high interest rate policy of the 1990s which, eventually, led to the financial sector meltdown.
Holness added that if the economy does not grow, the debt will reach the point where the Government will have serious difficulty servicing it.
"That's reality that we must begin to face. It is a reality that this Government must begin to face," he stated.
He said that country needed a clear growth strategy, as tinkering with interest rates would not solve the problem.
Phillips has, in recent weeks, been expressing optimism about the Government passing not only the first, but all other tests under the agreement with the IMF.
"We feel very satisfied about the June 30 performance review, and we expect that when the Fund Mission visits, that their review will confirm our review that June 30 targets were all on track," Phillips told a Manchester Chamber of Commerce forum at the Mandeville Hotel, recently.
"We expect, also, that there will be a similar performance for the future targets," he added.
Phillips also pointed out that progress has been made in implementing key components of the country's Economic Reform Programme, a prerequisite for concluding the Extended Fund Facility, as well as "important and positive signs" from these efforts.
However, Holness said yesterday that savings accrued from the National Debt Exchange were already being wiped out, and that the Government's tax reform programme was not comprehensive enough to achieve the targets for which it was proposed.