Tweet
What's holding up the IMF deal; Previous Gov’t...to blame
What's holding up the IMF deal; Previous Gov’t partly to blame
— says Peter Phillips
Sunday, December 30, 2012
FINANCE Minister Peter Phillips yesterday listed the collapse of talks between the previous Government and the International Monetary Fund (IMF) among a number of reasons for the current delay in signing an agreement with the multilateral agency.
That experience, according to Phillips, has resulted in the IMF insisting that, as much as possible, measures that are necessary for the conclusion of the deal must be implemented up front.
The IMF headquarters in Washington, DC.
1/2
Phillips, in giving a promised update on the IMF negotiations, said that the discussions required technical studies of the repercussions of policy changes and triggered vigorous debate to overcome differences on the appropriate measures, their impact, exceptions, timing, and significance.
"The process of arriving at agreement has also had to contend with fairly recent memories among Jamaica's multilateral partners of dishonoured commitments and disappointing performance," Phillips said in a statement.
"Thus, even where we agree in principle about what has to be achieved by the end of the first year of a programme, there is an instinctive insistence on the part of the IMF that as much as possible should be done up front," he added.
Phillips issued the statement in response to growing concern in the country about the state of the negotiations and how the recommended measures would affect the economy.
The Government has also taken heavy flak from the Opposition for not keeping its promise of having an IMF deal in place before the end of this year.
Last month, Private Sector Organisation of Jamaica (PSOJ) President Christopher Zacca, while expressing confidence that the country will get another agreement with the IMF, complained that the group was in the dark about details of aspects of the negotiations and thus had concerns.
But earlier this month, Dr Gladstone Hutchinson, the outgoing director general of the Planning Institute of Jamaica was brusque in responding to those concerns.
"The minister may not care for my response, but the PSOJ is not the Government," Dr Hutchinson told reporters following his final presentation to the Economy and Production Committee of Parliament at Gordon House.
"People elected a Government to negotiate these things and the Government has been very diligent. My colleagues have been working very hard; I am very proud of my colleagues and the work we have been doing in negotiating this.
"Frankly, I think the Government has addressed and kept abreast everyone who needs to be kept abreast sufficiently," he said.
In late October, Phillips had declared that "there are no areas of fundamental disagreement" between the IMF and his Government as to the outline of the programme to be concluded with the fund. He said discussions were now underway as to the contents of a draft Letter of Intent.
Furthermore, Phillips said at the time that "there is no delay in the process of negotiations with the IMF, and we are proceeding in accordance with the timetable originally set out".
Prime Minister Portia Simpson Miller is on record as saying a signing was anticipated by this December.
In his statement yesterday, Phillips said that he and his team had worked hard to meet that deadline.
Here is the finance minister's full statement.
On assuming office, one of the most urgent priorities of this Administration was to reopen the line of communication with the IMF and negotiate a new agreement that would satisfy the interest of Jamaica's economic recovery as well as the board of the IMF.
At the outset, my stated objective was to bring these negotiations to a satisfactory conclusion by the end of December 2012, and my negotiating team has worked assiduously to meet this deadline.
With the approach of this deadline I regard it as an obligation to provide the nation with an update. The primary objective of these negotiations with the IMF is to develop a multi-year economic programme that could be supported by the board of the Fund and other multilateral institutions. This multi-year programme is intended to address the lack of long-term growth and provide the best options for Jamaica.
Discussions have moved from diagnosis by way of an Article IV consultation, which was concluded in May 2012, to agreement on the key challenges to growth that need to be overcome, the areas of economic policy available to the Government, and some broad measures of success over a four- to five-year period.
Over the past two months, discussions have intensified with the visit of senior officials to Washington and, while many of us enjoyed the holidays, the negotiating team worked throughout the Christmas period including e-mail and telephone exchanges with Fund staff as recently as 28th December.
The Government is working to bring the negotiations to a conclusion that is mutually satisfactory to Jamaica and the board of the IMF. This agreement must be in the best interest of Jamaica and provide protection for the most vulnerable.
The final stage of the discussion centred on the challenges of halting the debt accumulation process, raising economic efficiency in both the private and public sectors, and creating the conditions for self-sustaining growth.
Consequently, there has been extensive and thorough exploration of the size, range and scope of the public sector and all the elements that contribute to the persistent fiscal deficits.
These include:
a) tax policy (which activities are taxed, at what rate, and which are exempted);
b) staff costs (wage rates, pension obligations and staff size);
c) interest costs (borrowing terms, sources and management);
d) efficiency in procurement and cash management;
e) capital expenditure (prioritisation, partnership, divestment); and
f) how best to protect the most vulnerable in the face of the changes to prices and incomes that flow from every adjustment in economic policy.
The discussions have therefore required technical studies of the repercussions of policy changes and have meant intensive deliberations to overcome differences of view on appropriate measures, impact, exceptions, timing, and significance. The process of arriving at agreement has also had to contend with fairly recent memories among Jamaica's multilateral partners of dishonoured commitments and disappointing performance.
Thus, even where we agree in principle about what has to be achieved by the end of the first year of a programme, there is an instinctive insistence on the part of the IMF that as much as possible should be done up front. For example, the implementation of major tax reform was a large downpayment that signalled the commitment of the Government to raise the primary surplus (revenue less non-interest expenditure) by more than three per cent of GDP, an unprecedented single-year adjustment, even though it meant delaying the budget presentation to allow for time to prepare.
Similarly, up-front implementation is being sought for a number of other proposed reforms. The Government has therefore invested great effort in advancing pension reform, wage negotiations, reducing the effective size of the public sector establishment, tax administration, introduction of a centralised treasury management system and various pieces of enabling legislation such as the Public Debt Management Act and regulations governing the Fiscal Responsibility Framework.
Remaining Issues
The discussions with the Fund's technical staff are virtually at an end. In light of the Fund's negative assessment of the world's economy, there is a need for Jamaica to programme steeper debt reduction and buffers in order to maintain a robust downward trajectory in the debt ratio through to 2020.
The last issues on which we are now actively focused include:
1) the approach and timetable for a comprehensive policy on tax waivers and incentives, and
2) safeguards against fiscal slippage in this fiscal year and the examination of even higher primary surpluses, in the medium term, to underpin targets for debt reduction.
Following conclusion of the negotiations, there will be prior actions to be undertaken subject to the approval the Cabinet and the necessary consultations with local stakeholders. The completion of these will determine the timing of the IMF Board's approval.
The time that is being taken to reach agreement is not unusual, and there are complex and weighty issues at stake which will determine the future prospects of our country. There is no doubt also that the continued implementation of economic reform is going to require commitment and sacrifice by all Jamaicans.
Progress along this pathway will require fundamental changes in our normal operational patterns. We will have to be more efficient and more diligent in how the State operates and how we facilitate investors in order to create the better jobs and higher levels of economic growth which together promise a better future for Jamaica and its people.
Even as we issue this update, negotiations are continuing with the IMF to arrive at an agreement that is beneficial to the people of Jamaica.
Read more: http://www.jamaicaobserver.com/news/...#ixzz2GVJsXuo8
— says Peter Phillips
Sunday, December 30, 2012
FINANCE Minister Peter Phillips yesterday listed the collapse of talks between the previous Government and the International Monetary Fund (IMF) among a number of reasons for the current delay in signing an agreement with the multilateral agency.
That experience, according to Phillips, has resulted in the IMF insisting that, as much as possible, measures that are necessary for the conclusion of the deal must be implemented up front.
The IMF headquarters in Washington, DC.
1/2
Phillips, in giving a promised update on the IMF negotiations, said that the discussions required technical studies of the repercussions of policy changes and triggered vigorous debate to overcome differences on the appropriate measures, their impact, exceptions, timing, and significance.
"The process of arriving at agreement has also had to contend with fairly recent memories among Jamaica's multilateral partners of dishonoured commitments and disappointing performance," Phillips said in a statement.
"Thus, even where we agree in principle about what has to be achieved by the end of the first year of a programme, there is an instinctive insistence on the part of the IMF that as much as possible should be done up front," he added.
Phillips issued the statement in response to growing concern in the country about the state of the negotiations and how the recommended measures would affect the economy.
The Government has also taken heavy flak from the Opposition for not keeping its promise of having an IMF deal in place before the end of this year.
Last month, Private Sector Organisation of Jamaica (PSOJ) President Christopher Zacca, while expressing confidence that the country will get another agreement with the IMF, complained that the group was in the dark about details of aspects of the negotiations and thus had concerns.
But earlier this month, Dr Gladstone Hutchinson, the outgoing director general of the Planning Institute of Jamaica was brusque in responding to those concerns.
"The minister may not care for my response, but the PSOJ is not the Government," Dr Hutchinson told reporters following his final presentation to the Economy and Production Committee of Parliament at Gordon House.
"People elected a Government to negotiate these things and the Government has been very diligent. My colleagues have been working very hard; I am very proud of my colleagues and the work we have been doing in negotiating this.
"Frankly, I think the Government has addressed and kept abreast everyone who needs to be kept abreast sufficiently," he said.
In late October, Phillips had declared that "there are no areas of fundamental disagreement" between the IMF and his Government as to the outline of the programme to be concluded with the fund. He said discussions were now underway as to the contents of a draft Letter of Intent.
Furthermore, Phillips said at the time that "there is no delay in the process of negotiations with the IMF, and we are proceeding in accordance with the timetable originally set out".
Prime Minister Portia Simpson Miller is on record as saying a signing was anticipated by this December.
In his statement yesterday, Phillips said that he and his team had worked hard to meet that deadline.
Here is the finance minister's full statement.
On assuming office, one of the most urgent priorities of this Administration was to reopen the line of communication with the IMF and negotiate a new agreement that would satisfy the interest of Jamaica's economic recovery as well as the board of the IMF.
At the outset, my stated objective was to bring these negotiations to a satisfactory conclusion by the end of December 2012, and my negotiating team has worked assiduously to meet this deadline.
With the approach of this deadline I regard it as an obligation to provide the nation with an update. The primary objective of these negotiations with the IMF is to develop a multi-year economic programme that could be supported by the board of the Fund and other multilateral institutions. This multi-year programme is intended to address the lack of long-term growth and provide the best options for Jamaica.
Discussions have moved from diagnosis by way of an Article IV consultation, which was concluded in May 2012, to agreement on the key challenges to growth that need to be overcome, the areas of economic policy available to the Government, and some broad measures of success over a four- to five-year period.
Over the past two months, discussions have intensified with the visit of senior officials to Washington and, while many of us enjoyed the holidays, the negotiating team worked throughout the Christmas period including e-mail and telephone exchanges with Fund staff as recently as 28th December.
The Government is working to bring the negotiations to a conclusion that is mutually satisfactory to Jamaica and the board of the IMF. This agreement must be in the best interest of Jamaica and provide protection for the most vulnerable.
The final stage of the discussion centred on the challenges of halting the debt accumulation process, raising economic efficiency in both the private and public sectors, and creating the conditions for self-sustaining growth.
Consequently, there has been extensive and thorough exploration of the size, range and scope of the public sector and all the elements that contribute to the persistent fiscal deficits.
These include:
a) tax policy (which activities are taxed, at what rate, and which are exempted);
b) staff costs (wage rates, pension obligations and staff size);
c) interest costs (borrowing terms, sources and management);
d) efficiency in procurement and cash management;
e) capital expenditure (prioritisation, partnership, divestment); and
f) how best to protect the most vulnerable in the face of the changes to prices and incomes that flow from every adjustment in economic policy.
The discussions have therefore required technical studies of the repercussions of policy changes and have meant intensive deliberations to overcome differences of view on appropriate measures, impact, exceptions, timing, and significance. The process of arriving at agreement has also had to contend with fairly recent memories among Jamaica's multilateral partners of dishonoured commitments and disappointing performance.
Thus, even where we agree in principle about what has to be achieved by the end of the first year of a programme, there is an instinctive insistence on the part of the IMF that as much as possible should be done up front. For example, the implementation of major tax reform was a large downpayment that signalled the commitment of the Government to raise the primary surplus (revenue less non-interest expenditure) by more than three per cent of GDP, an unprecedented single-year adjustment, even though it meant delaying the budget presentation to allow for time to prepare.
Similarly, up-front implementation is being sought for a number of other proposed reforms. The Government has therefore invested great effort in advancing pension reform, wage negotiations, reducing the effective size of the public sector establishment, tax administration, introduction of a centralised treasury management system and various pieces of enabling legislation such as the Public Debt Management Act and regulations governing the Fiscal Responsibility Framework.
Remaining Issues
The discussions with the Fund's technical staff are virtually at an end. In light of the Fund's negative assessment of the world's economy, there is a need for Jamaica to programme steeper debt reduction and buffers in order to maintain a robust downward trajectory in the debt ratio through to 2020.
The last issues on which we are now actively focused include:
1) the approach and timetable for a comprehensive policy on tax waivers and incentives, and
2) safeguards against fiscal slippage in this fiscal year and the examination of even higher primary surpluses, in the medium term, to underpin targets for debt reduction.
Following conclusion of the negotiations, there will be prior actions to be undertaken subject to the approval the Cabinet and the necessary consultations with local stakeholders. The completion of these will determine the timing of the IMF Board's approval.
The time that is being taken to reach agreement is not unusual, and there are complex and weighty issues at stake which will determine the future prospects of our country. There is no doubt also that the continued implementation of economic reform is going to require commitment and sacrifice by all Jamaicans.
Progress along this pathway will require fundamental changes in our normal operational patterns. We will have to be more efficient and more diligent in how the State operates and how we facilitate investors in order to create the better jobs and higher levels of economic growth which together promise a better future for Jamaica and its people.
Even as we issue this update, negotiations are continuing with the IMF to arrive at an agreement that is beneficial to the people of Jamaica.
Read more: http://www.jamaicaobserver.com/news/...#ixzz2GVJsXuo8
No him nah quote me, He is quoting Dr. Hero Peter Phillips from January last year.
Comment