KINGSTON-Ja­maica is now dis­cussing the con­tents of a draft Let­ter of In­tent for a new Stand­by Agree­ment (SBA) with the In­ter­na­tion­al Mon­e­tary Fund (IMF), Fi­nance Min­is­ter Dr Pe­ter Phillips has an­nounced. He told leg­is­la­tors on Tues­day that the con­tents in­clude the vir­tu­al elim­i­na­tion of the fis­cal deficit by 2015/16 and bring­ing the ra­tio of debt to gross do­mes­tic prod­uct (GDP) down to 100 per cent.

Phillips, who met with an IMF del­e­ga­tion that end­ed a vis­it here ear­li­er this month, said that let­ter would al­so in­clude progammes and po­lices that would re­duce the ra­tio of wages to GDP of cen­tral gov­ern­ment to no more than nine per cent by 2015/16 as well as a pro­gramme and timetable for pen­sion re­form.

Phillips said the Re­port of the Par­lia­men­tary Com­mit­tee which out­lined the pro­pos­als agreed to should be laid in the House very short­ly and that "im­por­tant struc­tur­al bench­marks for tax re­form, in­clud­ing im­prove­ment to Tax Ad­min­is­tra­tion, and the leg­isla­tive frame­work re­gard­ing tax re­form have al­so been set­tled".

He said that the White Pa­per set­ting out the gov­ern­ment's com­pre­hen­sive pol­i­cy stance on tax re­form has been con­sid­ered by Cab­i­net and fur­ther work is be­ing done pri­or to it be­ing tabled in par­lia­ment in No­vem­ber.

Phillips said that changes in poli­cies and pro­ce­dures that im­prove the en­vi­ron­ment for do­ing busi­ness and en­hance the po­ten­tial for faster eco­nom­ic growth by im­prov­ing the com­pet­i­tive­ness of Ja­maican busi­ness­es as well as the preser­va­tion of ex­pen­di­ture on so­cial spend­ing and im­prove­ments in the de­liv­ery and ef­fec­tive­ness of these pro­grammes, will al­so be in­clud­ed in the let­ter to the Wash­ing­ton-based fi­nan­cial in­sti­tu­tion.

The for­mer gov­ern­ment re­sumed a bor­row­ing re­la­tion­ship with the IMF in 2010 but was un­able to meet sev­er­al of the tar­gets un­der the SBA and in Ju­ly this year, Phillips in­di­cat­ed that the Por­tia Simp­son Miller gov­ern­ment in­tend­ed to rene­go­ti­ate the US$1.47 bil­lion agree­ment with the IMF which ex­pired in May.

But the main op­po­si­tion Ja­maica Labour Par­ty (JLP) has al­ready called on the gov­ern­ment to lay on the ta­ble all the de­tails re­gard­ing the dis­cus­sions to the pub­lic so con­fi­dence can be in­creased. For­mer fi­nance, Au­d­ley Shaw, said that Phillips' state­ment in­di­cates he is back­ing off a De­cem­ber dead­line for an agree­ment with the IMF.

"The min­is­ter in the House of Rep­re­sen­ta­tives ... in fact backed away, for the first time, from a De­cem­ber dead­line," Shaw told a lo­cal news­pa­per,adding "he nev­er even men­tioned the month of De­cem­ber:

In fact, he men­tioned no month at all. "When I chal­lenged him on the con­se­quences of mak­ing con­tra­dic­to­ry state­ments, in which the prime min­is­ter says one thing and he says an­oth­er and that this is de­struc­tive to con­fi­dence build­ing in the econ­o­my, he to­tal­ly backed away from that po­si­tion.

"Now, what the coun­try faces is that we don't know when an IMF agree­ment will come and I feel pret­ty cer­tain that, on the ba­sis of the tra­jec­to­ry that is there, where the tax re­form white pa­per and the pen­sion re­form white pa­per will not come un­til No­vem­ber, I am now pret­ty cer­tain that no De­cem­ber IMF agree­ment is on the cards, and the min­is­ter knows that and that is why he has backed away from his De­cem­ber tar­get," Shaw said.

Phillips told par­lia­ment that the IMF has broad­ly ac­cept­ed the medi­um term pro­gramme which will un­der­pin any deal and that there are no "ar­eas of fun­da­men­tal dis­agree­ment" be­tween the IMF and the gov­ern­ment. But he ac­knowl­edged that "some im­por­tant tech­ni­cal is­sues which re­main to be fi­nal­ized.

"The pri­ma­ry is­sue cen­tres up­on the shared view that giv­en the gen­er­al­ly pre­car­i­ous con­di­tions with­in the world econ­o­my and the risks that this neg­a­tive out­look en­tails for in­debt­ed and vul­ner­a­ble economies such as ours, there is a need for us to con­struct buffers for such even­tu­al­i­ties.

"Dis­cus­sions re­gard­ing such buffers con­tin­ue and we are ex­plor­ing is­sues re­gard­ing the pos­si­bil­i­ty, for ex­am­ple, of ad­di­tion­al debt ini­tia­tives such as debt for as­sets swaps with pub­lic sec­tor bond­hold­ers and debt for na­ture swaps." Phillips said that de­spite con­straints the gov­ern­ment would con­tin­ue with plans to grow the lo­cal econ­o­my adding "it must be un­der­stood that the cen­tral ob­jec­tive of this pro­gramme is to cre­ate the con­di­tions for faster, more sus­tain­able growth".

"Our ap­proach is strate­gic, our pro­grammes are sound and our prospects are bright. There is work to be done. But we are in a po­si­tion to move for­ward in con­fi­dence. I see us as be­ing on the cusp of an IMF agree­ment that will bol­ster that con­fi­dence.

"We will have as a Par­lia­ment, as a Gov­ern­ment, as a peo­ple, to make sure that when an agree­ment has been signed, we, all of us and all Ja­maica, keep to the com­mit­ments which we make," Phillips said, not­ing that the "ex­change rate move­ment has al­so been a re­flec­tion of the un­cer­tain­ty that some peo­ple have ex­pressed about the tim­ing of a pro­gramme with the IMF.

"It is a very dif­fi­cult time, but we all have to ex­er­cise some pa­tience as there are process­es that we have to go through," he said, ask­ing "for pa­tience and re­spon­si­ble ac­tion from our cit­i­zens as we tie up the last el­e­ments of our ne­go­ti­a­tions with the IMF. "We need the sup­port of every sec­tor, every or­ga­ni­za­tion, and every in­di­vid­ual as we go for­ward.

I do not ex­pect that every­one will be hap­py with every as­pect of the pro­gramme. What I ask for is an un­der­stand­ing that, as a gov­ern­ment, we have been seek­ing and will con­tin­ue to seek the best pos­si­ble agree­ment with the Fund; one that em­bod­ies a con­sis­tent set of poli­cies that will lead to long term sta­bil­i­ty and growth," Phillips told leg­is­la­tors.

CMC