Prime Minister P J Patterson appeared confident last night that his government would soon reach an economic monitoring agreement with the International Monetary Fund (IMF), which the administration expects will make it easier, and cheaper, to borrow on domestic and international monetary markets.

In a broadcast in which he gave an upbeat assessment the economy, Patterson said that the new programme, under which Jamaica and the IMF will agree to quarterly performance criteria “is being given favourable consideration by the Fund”.

“The proposal for the new arrangement is to have the board of directors of the Fund carry out the monitoring, thus giving the IMF’s endorsement,” Patterson said in his broadcast on radio and television.

Jamaica ended its borrowing agreement with the IMF in 1996 and subsequently entered a Staff Monitored Programme (SMP), under which the Fund staff help set and monitor economic performance targets.

However, last year the IMF abandoned SMPs for all countries, when the board claimed that they were often misinterpreted for full IMF programmes carrying the imprimatur of the board and often used as benchmarks by the international markets in dealing with countries that have such programmes.

Since then, Jamaica, which has struggled with its huge debt and burdensome public sector deficit, has sought to find a new mechanism that would provide an IMF seal of approval without entering into a borrowing agreement.

“The transparency and accountability that will be established in this new relationship will be very important, and it serves as a signalling mechanism for the domestic and international capital markets,” Patterson said.

“This means an independent authority – that is the board of the IMF – will evaluate the benefits and perceived risks that are involved in investing in the Jamaican economy,” he added. “With positive performance, this mechanism is expected to contribute to the improvement of our international credit rating and a reduction of the cost of borrowing in the external marketplace.”

Faced with a debt of approximately one-and-a-half times its annual output, and a public sector deficit of near seven per cent of gross domestic product (GDP), Jamaica, until recently, found it difficult to borrow on the international market. In fact, the country’s domestic debt was downgraded by the international rating agency, Standard & Poor’s.

But Patterson, in last night’s broadcast, was confident about the direction of the Jamaican economy after a string of recent positive developments, including the recent announcements of several major investments and a two-year wage freeze agreement by several public sector unions.

Under the agreement with trade unions, the Government has agreed not to cut up to 15,000 civil service jobs in exchange for their undertaking to delay the timetable to reach a salary of 80 per cent of their counterparts in the private sector and to limit the rise in the wage bill to no more than three per cent.

“We are continuing discussions with other categories of public sector workers and hope that we will be able to reach an equally positive contribution,” the prime minister said.

Patterson also highlighted the fact that Jamaica was the only developing country which appeared in the top 10 of countries for doing business, saying that this was a direct result of his administration’s reform and modernisation of the public sector.

Among the fruits of this, he argued, were major investments in the tourism and bauxite/alumina sectors, including the recent announcement of a US$690-million project by Alcoa to expand the Jamalco alumina refinery in Hayes, Clarendon.

“These investments certainly represent another vote of confidence by private investors in the Jamaican economy,” Patterson said.

In tourism, where several Spanish hotel chains have recently bought lands and signalled major investments, Patterson told Jamaicans that they should join the action, especially in the development of attractions. They should take advantage of available funds in development banks as well as falling interest rates.

“I urge members of our communities with initiative and drive to take advantage of the real potential that exists for the development of attractions,” he said. “If you have a plan, or even if you are just at the idea stage, come forward and discuss them with one of the many institutions that exist to encourage entrepreneurship.”