Finance and Planning Minister, Dr Peter Phillips (left), responds to a question during a press conference to provide details about the recent International Monetary Fund (IMF) mission to Jamaica. Looking on is IMF Mission Chief for Jamaica, Jan Kees Martijn.
By Caribbean News Now contributor
KINGSTON, Jamaica -- Jamaica’s Finance and Planning Minister, Dr Peter Phillips, said the visiting team from the International Monetary Fund (IMF), has broadly accepted the medium term economic programme, which was agreed by the Cabinet, as a viable starting point for negotiations.
The IMF team arrived on the island on September 24 to conduct negotiations towards a new agreement, and Phillips pointed out that over the past two weeks, substantial and significant progress has been made in advancing the work in critical areas of "structural reform, including taxation policy and tax administration, pensions and wages, among other areas."
"We are at the point where we are sufficiently advanced that 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," the minister noted.
Phillips, who was addressing a wrap-up press conference with the IMF Mission team on Friday, said the government is still working to arrive at an agreement for submission to the IMF Board by year end.
He pointed out however, that there is still "some technical work that needs to be undertaken by both sides," and that in the upcoming days, a technical team will be visiting Washington to continue discussions with their counterparts at the IMF.
"There is still work to be done in finalising and agreeing on all the elements of the programme. There is technical work to be done in some areas. There is a refinement of the language to be undertaken in relation to some of the clauses in the working draft…. but overall, there has been substantial agreement on the basic framework of the programme that is to be agreed and which we consider to be a matter of high priority for us in the government,” Phillips said.
Fund Mission Chief for Jamaica, Jan Kees Martijn, agreed that his team has "made substantial progress in identifying policies that could underpin a Fund arrangement."
"I believe we have a shared diagnosis of the economic situation. We have a shared understanding of the short term vulnerabilities and longstanding structural challenges facing Jamaica, in particular, the cycle of low growth and high debt that has affected the country. We agreed on the need for a medium term economic programme that promotes high growth, that includes strong macro-economic policies to foster stability and a sustainable position and that is also fostering, critically, social cohesion," the IMF mission chief said.
Martijn explained that the negotiating parties have reached an understanding on elements of the growth agenda; on some important structural reforms in fiscal and other areas, such as financial markets, and have discussed the preliminary timetable for the specific targets and objectives under an IMF programme.
He stated that the team is committed to working expeditiously to reaching an agreement on this programme.
The IMF mission met with the Prime Minister Portia Simpson Miller, Minister of Finance Peter Phillips, Bank of Jamaica Governor Brian Wynter, Financial Secretary Wesley Hughes, senior government officials, and representatives of the private sector and civil society.
At the conclusion of the mission, Martijn issued the following statement:
“Jamaica has long-standing structural weaknesses. A key challenge is how to attain higher and sustainable rates of economic growth, while reducing macroeconomic risks, including from the high public debt and high unemployment. Recent fiscal actions, anchored on the Fiscal Responsibility Framework, are a promising first step to address the cycle of low growth and high public debt. Going forward, the authorities and the IMF team agree on the need for a medium-term economic program that:
• promotes a growth-oriented environment, aimed at improving productivity and competitiveness while raising efficiency;
• follows strong macroeconomic policies, reflected in significantly higher primary fiscal surpluses, a narrower current account deficit, fiscal and financial reforms, and strong financial sector regulation and supervision; and
• fosters social cohesion, including through well-targeted health care and education spending and a more effective social safety net.
“The mission and the authorities made significant progress in identifying policies that could underpin a Letter of Intent and Memorandum of Economic and Financial Policies. Mutual understandings have been established on:
• elements of a growth agenda that is consistent with debt reduction and fiscal consolidation;
• some important structural reforms to promote growth, support fiscal and external sustainability, and enhance financial market stability; and
• a preliminary timetable for implementing various structural benchmarks to monitor progress in meeting possible program objectives.
“Further deliberation of the strategy is still needed to take account of the complexity of the Jamaican situation. In that regard, the mission and the authorities have agreed on the next steps to be pursued. Staff and the authorities are committed to working as expeditiously as possible toward agreement on an economic program that can be supported under a Fund arrangement.”