No IMF worries
Published:Wednesday | August 3, 2011 | 12:00 AM
- Government of Jamaica says nation not desperately in need of funds 'right now'
Daraine Luton, Senior Staff Reporter
Financial Secretary Wesley Hughes is dismissing concerns that the country could be in dire straits because of its inability to draw down on an estimated US$300 million under the standby agreement with the International Monetary Fund (IMF).
"It is not money that we are in need of right now. We are not desperately in need of IMF funds," Hughes told The Gleaner yesterday.
His comments come amid concerns expressed by the Opposition that Jamaica might have failed its last two quarterly IMF tests.
The drawdown on multilateral funding is contingent on Jamaica's performance in quarterly IMF reviews and, for one, the European Union has already delayed the disbursement of funds to the Ministry of Finance, as a result of the lack of information on the most recent reports scheduled for December 2010 and March this year.
No review before budget
While acknowledging that there were set quarterly targets under the IMF agreement and that the time had passed for the two quarterly reports, Hughes said no review would take place until after the Supplementary Budget is tabled.
"There was a delay after the December quarter, and that ran into the March quarter, and they (IMF) said, 'let us combine them and have one review'."
Pointing to the stand-off with public-sector workers for outstanding salaries, he added: "Then, we started having discussions with the unions and that delayed the process."
Hughes told The Gleaner that it would normally take six to eight weeks for the ministry to have all the numbers in place for the IMF review.
The Ministry of Finance said yesterday that the Government has four major issues to resolve before the IMF reviews the country's programmes. Among the issues is the seven per cent wage settlement for public-sector workers.
"Additional revenue needs, or expenditure cuts arising from the settlement, will be outlined in the Supplementary Budget to be presented on August 31," the ministry said.
The People's National Party has said the Government owes Jamaicans an explanation of the country's standing in relation to the two quarterly performance tests.
Well-placed government sources who disagree with Hughes' explanation noted, however, that IMF review teams had visited the island to conduct assessments. They also told The Gleaner that the credibility of the country's medium-term programme, especially as it relates to reducing the country's wage bill, has been questioned.
Under the 27-month agreement with the IMF, Jamaica had agreed to reduce the public-sector wage bill from 11.5 per cent of gross domestic product (GDP) to 9.5 per cent of GDP.
Prime Minister Bruce Golding told Parliament in April that the requirement could lead to approximately 10,000 job cuts.
At the time, the Government had not settled the issue of paying public-sector workers the seven per cent increase which was due to them.
Hughes said the matter of making the accommodation in the Budget for the payment of those outstanding funds is of concern to the IMF.
He said that issue is being worked on, and Finance Minister Audley Shaw will, later this month, table supplementary estimates in Parliament, which will indicate how government programmes will be impacted by the payment to the workers.
A further $10.4 billion is to be included in this year's Budget to meet the payments. A total of J$31.5 billion is owed to public-sector workers.
Shaw, in April, tabled a J$545-billion package which did not include the outstanding payments to the public-sector workers.
"The third and fourth reviews of the Jamaica programme with the IMF have, in fact, been postponed, pending the resolution of certain issues, including the public-sector seven per cent wage dispute, finalisation of the Clarendon Alumina Partners divestment, and discussions on tax and waiver reforms," Shaw said in a release last night, backing up Hughes' claim.
It was not immediately clear yesterday how the absence of the IMF reviews has impacted on Jamaica's ability to access other multilateral funds.