The IMF mission chief, Jan Kees Martijn, confirmed that all the quantitative performance targets and indicative targets for end-June were met, including the floor on social spending, as well as structural benchmarks for the quarter.
Notwithstanding the staff-level assessment, a determination as to whether the country has passed the first test will be undertaken by the IMF’s management which, if satisfied, will send it to the executive board for review in late September.
If approved, SDR 19.97 million (about US$30 million) would be made available to Jamaica – by September 20 according to the programme date – representing the second tranche of the US$932-million EFF funds to be distributed over the life of the four-year programme.
Finance and Planning Minister Dr Peter Phillips, referencing the targets met, said the discussion with the IMF team also focused on the primary challenge of restoring private sector-led growth in the shortest possible time.
Addressing a press conference at the ministry’s offices in Kingston on Thursday, Dr Phillips said he was satisfied with the performance of government agencies in fulfilling the requirements of the programme thus far.
“I am pleased, also, that many in the private sector are beginning to respond to the opportunities created under the programme. We are seeing, for example, an expansion in the level of private credit,” the minister said.
Phillips said that over time, as confidence builds in the sustainability of the programme and as greater understanding spreads about the rationale underpinning the programme, “We expect many more in the private sector to begin to seek out opportunities to become truly enterprising and reach out for the earning opportunities that are available in this very competitive global and domestic environment.”
Also addressing the press conference, Martijn said the mission, which arrived in Jamaica on August 14 and is expected to leave today, found that the economy was still weak and that there was still a lot of uncertainty.
“We are aware of the growth numbers, which remain dis-appointing, and also unemployment, which remains high and has even gone up because of an increase in the labour force,” he said.
According to Martijn, “many investors remain to be convinced that this programme will truly take hold.”
In the last agreement between Jamaica and the IMF in 2010, which the EFF succeeds, Jamaica also hurdled the first two tests. The stand-by agreement derailed shortly thereafter.
Under the EFF’s first review, Martijn and his team assessed Jamaica’s performance and “found that programme implementation thus far has been strong and that the structural reforms have been progressive”.
The IMF team has reached understandings with the Government on an updated or supplementary memorandum of economic and financial policies spelling out the next steps to be taken.
Important elements include the adoption of fundamental tax reform designed to broaden the tax base, simplify the tax system, reduce tax rates, reduce economic distortions and support growth.
It also includes steadfast implementation of the Government’s strategy to increase growth by improving the business environment and pursuing strategic investments, further actions to make the financial sector more resilient, and strengthening the social protection framework.
Those are among the issues, as well as updates to other elements of the four-year economic programme that will be outlined in a letter of intent and supplement to the April 17, 2013 memorandum of economic and financial policies to be submitted to the executive board of the IMF in September.