No 'fundamental disagreement' with IMF, says Phillips

BY ALICIA DUNKLEY-WILLIS Senior staff reporter

Wednesday, October 24, 2012    

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FINANCE Minister Dr Peter Phillips yesterday declared that "there are no areas of fundamental disagreement between the International Monetary Fund (IMF) and the Government" regarding the outline of the programme to be concluded with the lending agency.

At the same time, Phillips said that discussions now underway are geared at arriving at a draft letter of intent.

"There is no delay in the process of negotiations with the IMF, and we are proceeding in accordance with the timetable originally set out," Dr Phillips said in a statement to the House of Representatives.

He said the areas to be covered include, among other things, the virtual elimination of the fiscal deficit by 2015/16. In other words, a central government budget consistent with an overall fiscal balance close to zero per cent of Gross Domestic Product (GDP), bringing the ratio of debt to GDP down to 100 per cent and programmes and policies that would reduce the ratio of wages to GDP of central government to no more than nine per cent by 2015/16.

Other areas included a programme and timetable for pension reform. He said important structural benchmarks for tax reform, including improvement to the Tax Administration, and the legislative framework regarding tax reform have also been settled.

In the meantime, however, he said some important technical issues remain to be finalised.

"The primary issue centres on the shared view that, given the generally precarious conditions within the world economy and the risks that this negative outlook entails for indebted and vulnerable economies such as ours, there is a need for us to construct buffers for such eventualities," Dr Phillips said.

He told the House that discussions regarding such buffers continue.

"We are exploring issues regarding the possibility, for example, of additional debt initiatives such as debt for assets swaps with public sector bondholders and debt for nature swaps," the finance minister noted. He however emphasised that his Government had no intention of conducting a Jamaica Debt Exchange such as was carried out by the previous Jamaica Labour Party Government.

A negotiating mission from the IMF visited Jamaica between September 24 and October 5 this year. Dr Phillips said mutual understandings were established relating to a growth agenda, structural reforms, and a preliminary timetable for implementing structural benchmarks to monitor progress.





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