Jury still out on IMF test

Daraine Luton, Senior Staff Reporter

Financial Secretary Dr Wesley Hughes has contradicted a statement from junior finance minister Arthur Williams that Jamaica has passed its first International Monetary Fund (IMF) test.

Hughes, writing in this newspaper yesterday, said the assessment of Jamaica's performance in meeting the March 31 target would be completed in another four to six weeks.

Williams had declared last week that Jamaica had passed its IMF test.

"We expect to get the formal notification from the IMF in a few days but our technocrats have assured us that everything is in place and that we have passed the IMF test," Williams told The Gleaner/Power 106 News last Wednesday.

There has since been no announcement from Government about achieving the targets agreed on with the IMF, which is providing US$1.28 in balance-of-payment support to Jamaica over a 27-month period.

Sure of pass

Three weeks ago, Finance Minister Audley Shaw told Parliament that Jamaica would pass the IMF test, paving the way for the drawdown of the US$100 million from the fund due in the second quarter of 2010.

"The targets for the IMF for March will be met. We will pass the test in March," Shaw told Parliament's Standing Finance Committee shortly after tabling a second supplementary estimates of expenditure for the 2009-2010 fiscal year.

Shaw told Parliament then that he would provide the figures to justify his optimism "at the appropriate time".

The 27-month facility requires the country to effect reforms in the public sector to substantially reduce the large budget deficit; create a debt strategy to reduce debt-servicing costs; and implement reforms to the financial sector to reduce risks.

Needs to pass may test

Government has already benefited from US$650 million of the US$1.28-billion facility. The country must pass the test in May to benefit from another US$100 million.

As part of the original IMF targets, the Government had to keep the fiscal deficit under $107 billion. However, the performance indicators suggest that the country has exceeded that by nearly $15 billion.

Jamaica also had to maintain a primary surplus of $66.9 billion or 6.2 per cent of gross domestic product, a target which government officials say is the most critical of the strictures outlined by the IMF.

Government sources told The Gleaner yesterday that although it is early days with regard to finalising the country's performance scores, it appears the primary surplus target has been met.

"This suggests a pass but we have to wait and see," government sources told The Gleaner.