Phillips: Gov’t reducing debt to meet IMF demands

BY BALFORD HENRY Observer senior reporter

Wednesday, July 18, 2012

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THE Government has acquired some US$265 million in loans from domestic sources in a bid to reduce the debt and boost its chances of a new agreement with the International Monetary Fund (IMF) by December.

Following a statement to the House of Representatives yesterday, Minister of Finance and Planning Dr Peter Phillips explained that the loans would not affect the Net International Reserves (NIR) and that, although "speculative pressure" is expected to build up around the exchange rate, the Bank of Jamaica was prepared to handle it.

In a statement, which followed last week’s trip to meet with the IMF in Washington DC, Phillips said that it was the Government’s hope that it will be able to conclude negotiations with the Fund following meetings with an IMF team which begin in Kingston on July 23.

"It is our hope that we will be able to conclude negotiations with the staff of the Fund, so that the board of directors will be able to make a decision in the last quarter of the calendar year," he said.

The loan is expected to fill the gap created by the failure of the minister’s London "road show" last April, which sought Eurobond support for a euro200-million debt payment due on July 27 and which has been endangering the agreement.

But Opposition spokesman on finance and the public sector Audley Shaw felt that Phillips’ statement did not offer much confidence.

"Hoping to have a decision in the last quarter doesn’t offer a lot of confidence. What is he expecting us to do, rely on his hope?" Shaw told the Jamaica Observer.

He said that he was also concerned that the US dollar loan was funded by the PetroCaribe oil facility fund, but needed more particulars from the minister before he could make a substantial statement.

"I have concerns, because the PetroCaribe Fund precludes expenditure for budgetary support," he added.

Phillips said that during last week’s talks in Washington, DC, a number of issues were raised by the Fund, including tax reform and the reduction of public sector wage-related expenditure, in terms of pension reform and the programme of public sector rationalisation.

In response to questions from the Leader of Opposition Business Delroy Chuck, Phillips said that the Government wants to bring the negotiations to a conclusion, particularly because persons had investment decisions to make.

However. he insisted that in terms of protecting the interest of Jamaicans, "we will be very strenous in defence of our position in this regard".

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