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Jamaica: IMF loan deal later this year
(Reuters) – Jamaica is in advanced talks with the International Monetary Fund (IMF) on a new lending agreement and another round of discussions aimed at hammering out a deal is set to begin early next week, Finance Minister Peter Phillips said.
In a statement to the parliament of Jamaica on Tuesday, Phillips indicated the government hoped to have a new standby agreement with the IMF in place by the end of this year.
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“Last week, I visited Washington, D.C., where I had discussions with the staff of the IMF and with the Inter-American Development Bank covering Jamaica’s macroeconomic program,” Phillips said.
“The objective of the visit was to present the fund with an update on the macreconomic developments in Jamaica, including the recently concluded budget exercise and more importantly, to settle definitively on a timetable to bring negotiations closer to an agreement and conclusion,” he said.
“I can report that a team from the fund will come to Jamaica for meetings to begin on July 23rd. We will use the opportunity to further advance discussions,” Phillips added.
“This will be followed up by a larger negotiating mission in the month of September. It is our hope that we will be able to conclude negotiations with the staff of the fund so that we will be able to have a decision from the Board of Directors of the Fund in the fall,” he said.
IMF concerns about tax reform, the need for cuts in the public sector payroll and pension reform in Jamaica were among outstanding issues to be resolved, Phillips said.
He also said the government had secured funding to honor a 200 million euro (US$ 245 million) payment due on July 27. The money was raised from the domestic market, he said.
A 27 month standby agreement worth US$1.27 billion expired in May, although it effectively lapsed after the previous government was unable to meet performance targets set by the IMF.
The IMF has said Jamaica’s debt burden stood at 126 percent of gross domestic product GDP last year. However, its economy has begun to inch forward after struggling during the global recession.
The IMF is predicting that Jamaica will record 2.4 percent growth this year, after growing 1.5 percent during the past year according to the Planning Institute of Jamaica. The growth was the first annual expansion in real GDP since 2007, driven largely by demand for bauxite and alumina as well as increased agricultural production.
A new People’s National Party (PNP) administration that took office in January, led by Prime Minister Portia Simpson-Miller, has said that although the terms of a new agreement will be tough, the administration will try to protect the most vulnerable in a society where poverty levels have risen to 21 percent of the population from 9 percent four years ago.