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IMF delay - Phillips says 'contingent' talks holding up deal

BY BALFORD HENRY Observer senior reporter balfordh@jamaicaobserver.com

Wednesday, March 20, 2013    

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FINANCE Minister Dr Peter Phillips told Parliament yesterday that 'contingent discussions' are holding up submission of the Government's programme to the International Monetary Fund (IMF) board for approval by month end.

"There are some contingent discussions now taking place between the Fund, the Inter-American Development Bank (IDB), and the World Bank regarding the extent of the commitment from each institution to support the IMF programme (for Jamaica)," Dr Phillips said.

He was responding to questions raised by Opposition spokesman on finance Audley Shaw seeking an update on the negotiations with the Fund.

Phillips said that the submission of the programme to the IMF board for final approval will have to await the outcome of the discussions which are taking place this week in Washington, DC.

He said that it was still possible that the submission will be made before the end of March, which was the timeline he had given following agreement on the Letter of Intent last month. However, he said that it was important that the IDB and the World Bank agree to a "substantial commitment" to support the new IMF programme, in addition to commitments from other agencies.

Shaw also questioned the minister on whether he would be proposing a liability management programme in relation to the stock of external debt, which would also include budget-threatening bonds related to Air Jamaica, Clarendon Alumina Productions and the National Road Operating and Construction Company (NROCC), the state company with responsibility for ensuring the implementation of Highway 2000.

Shaw pointed out that the three named bonds have fiscal implications and could affect inflation figures, and ultimately impact the budget.

Dr Phillips said that it has always been the intention of the Government, in relation to its debt-reduction strategy, to include some "market friendly" components in relation to "other debts", including "debt buy-backs, buy-back of high coupon debts, and possible re-issuing of that debt and lower interest debt".

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