JAMAICA is on track to pass its ninth IMF test, but will have to wait longer to see whether or not it will recieve any relaxation of the programme stemming from the recent reduction in the debt-to-GDP ratio.

Government has previously said that its buy-back of PetroCaribe debt should see a 10 per cent fall in the important debt-to-GDP ratio — which some analysts hope would mean a reduction in some of the tight constraints of the IMF programme, particularly on the 7.5 per cent primary surplus.

But IMF mission head Uma Ramakrishnan, while stating that the debt reduction “is indeed a very positive outcome”, would not be drawn into whether any such changes are likely.

“Discussions are in progress,” she said at a press conference at the Ministry of Finance in Kingston on Friday. But she noted that such discussions are not unusual and are a normal part of any review of the IMF programme. “All targets will be reviewed.”

She was speaking at the end of a 10-day mission, just before the team’s departure.

“A gradual economic recovery is under way,” she said, listing several positive signs, including inflation at “historic lows,” unemployment down and tax revenues that “exceeded expectations”.

On the Government side, any adjustment that might be made to the programme has to be about “growth-inducing expenditure on the capital side of the budget”, according to Minister of Finance Peter Phillips.

“Jamaica continues to show positive macro-economic performance,” Phillips said, “despite the drought.”

“Government remains committed to the economic programme,” he stated.

No more ‘run wid it’

“Too often we have sought instantaneous solutions, thinking in time horizions that are too constrained in political considerations,” Phillips said.

While noting that “even the blind can see” that an election is near, Phillips sought to put to rest fears that the Government would seek to increase spending “to satisfy any short-term prize”.

“We will not do that,” he said.

Divestments

Meanwhile, Phillips indicated that the divestment of various government businesses will continue. Kingston Container Terminal is currently in the process of being divested to French company CMA CGM Terminal Links, with others in various stages of divestment including the Norman Manley International Airport, Petcom and the railway.

All these divestments “will have a favourable impact on the economy,” Phillips said.

But “more are to come”, Phillips said, and will be announced in the future.

On the subject of the National Water Commission, Phillips said that considerable capital investment will be needed and that there should be some consideration of a Public Private Partnership (PPP) “to allow private investors to take up some of the investment and the risk”.

“A major impediment to our growth has been our debt overhang that has existed for many, many decades.” Phillips said.

“We still have among the highest debt-to-GDP ratios — not just in the Caribbean, but globally,” he said.