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Phillips says IMF deal possible by year-end

Saturday, October 06, 2012    

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GOVERNMENT is yet to reach an agreement for a new stand-by facility with the International Monetary Fund (IMF).

However, an optimistic finance minister, Dr Peter Phillips, said the medium-term agreement being negotiated between the Jamaican government and the IMF could be completed by the end of the year, although much work remains to be done in order to seal a deal.

Dr Phillips, along with chief of the IMF mission here in Jamaica for the last 12 days, Jan Kees Martijn, said substantial progress had been made towards the completion of the agreement, and that discussions on a draft of the basic outline of the programme were underway.

"We have made substantial and significant progress over the past two weeks in advancing the work in structural reform including taxation policy and tax administration, pensions, wages, and the growth agenda," Phillips told reporters at a press conference held at the finance ministry in Kingston.

"We are at the point where we are sufficiently advanced; we have started to discuss a draft outline of a Letter of Intent and memorandum of economic and financial policies which would be the embodiment of the programme," added the minister.

Martijn, who has since September 25 held discussions with a wide cross section of institutional leaders in Jamaica, including Prime Minister Portia Simpson Miller, the private sector, the Opposition, Cabinet ministers, trade unions and Government officials, said there has been shared diagnosis and understanding with the Government on the "short-term vulnerabilities and of the longstanding structural challenges facing Jamaica, in particular the cycle of low growth and high debt".

Martijn said Jamaica needs a programme that "promotes high growth that includes strong macro-economic policies to foster stability and a sustainable position and social cohesion".

The IMF mission, in a statement issued to the media, said the Jamaican authorities and the IMF team agreed on the need for a medium-term economic programme that, among other things, should improve productivity and competitiveness, fiscal and financial reforms and a more effective social safety net.

Asked if an agreement would be likely by year-end, Dr Phillips said it was "still possible and still feasible" if about two or three remaining technical issues were resolved.

Martijn, in the meantime, said a number of steps were involved in reaching an agreement, including negotiating, evaluating, reaching a staff level agreement, administrative processes, prior actions, and finally the board meeting.

"We are committed to working together as fast a possible", he said.

Dr Phillips said there were no sticking points in the discussion, and Martijn said that in the discussion strong emphasis was placed on economic growth and the creation of jobs. He said that following discussions with businesspersons, the financial sector among others, he was optimistic about opportunities for business here.

"It has become clear to us that there are a number of opportunities out there in a range of sectors -- distribution, ICT (information and communications technology), agriculture and elsewhere," he said.

Dr Phillips, along with Bank of Jamaica Governor Brian Wynter and Financial Secretary Dr Wesley Hughes were scheduled to leave the island for Tokyo, Japan, where the annual meetings of the IMF and the World Bank are scheduled to be held next week.

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