Ja­maica ‘grad­u­ates’ from ex­tended fund fa­cil­ity

Jamaica Gleaner - - IMF TRACKER - McPherse Thomp­son As­sis­tant Ed­i­tor – Busi­ness mcpherse.thomp­son@glean­erjm.com

WITH A new agree­ment pend­ing ap­proval by the board of the In­ter­na­tional Mon­e­tary Fund (IMF), Ja­maica will not be sub­ject to the last two re­views un­der the ex­tended fund fa­cil­ity (EFF) the pre­vi­ous gov­ern­ment en­tered more than three years ago.

Last week, the An­drew Hol­ness-led ad­min­is­tra­tion an­nounced that it has reached a staff-level agree­ment on a new eco­nomic pro­gramme that would be sup­ported by a three­year pre­cau­tion­ary standby ar­range­ment with ac­cess to about US$1.7 bil­lion.

IMF mis­sion chief to Ja­maica Dr Uma Ra­makr­ish­nan said that as a con­se­quence, the last two re­views un­der the ex­tended fund fa­cil­ity would not take place.

“We have fin­ished 13 re­views. The 14th re­view, if it was to take place, would go to the board in De­cem­ber, and the 15th would have gone to the board in March,” she told Wed­nes­day Busi­ness in an in­ter­view last week.

“We see this as a sort of grad­u­a­tion for Ja­maica from the EFF to some­thing dif­fer­ent,” she said.

She said Ja­maica’s ex­em­plary achieve­ments un­der the EFF “and the fact that it is be­ing re­placed by a much larger amount speaks to the vote of In­ter­na­tional Mon­e­tary Fund Mis­sion Chief to Ja­maica, Dr Uma Ra­makr­ish­nan.

con­fi­dence that the Fund has in Ja­maica’s per­for­mance.”

The mis­sion chief ex­plained that the standby agree­ment is pre­cau­tion­ary to the ex­tent that the money will be avail­able to the Gov­ern­ment and can be

drawn if there is an ad­verse shock, for ex­am­ple, if there is a nat­u­ral dis­as­ter or a change in com­mod­ity prices that ad­versely im­pacts the coun­try.

Dr Ra­makr­ish­man said there would be con­ti­nu­ity in terms of

main­tain­ing the macroe­co­nomic sta­bil­ity that has been achieved un­der the ex­tended fund fa­cil­ity, em­pha­sis­ing, how­ever, that “macro sta­bil­ity is not a suf­fi­cient con­di­tion for growth”. In that sense, the new pro­gramme will fo­cus on, among other things, growth and job cre­ation.


She ex­pects that fol­low­ing the board’s ap­provals, there will still be pe­ri­odic re­views but they may be less fre­quent than the quar­terly tests which oc­curred un­der the EFF.

The quan­ti­ta­tive frame­work un­der­ly­ing the new ar­range­ment will en­tail cri­te­ria sim­i­lar to those in the EFF so that the macroe­co­nomic sta­bil­ity that has been achieved so far can be main­tained go­ing for­ward, Dr Ra­makr­ish­nan said.

“Meet­ing the con­di­tion­al­i­ties un­der the new pro­gramme is no dif­fer­ent from the EFF,” she said, adding that “the process by which the board ap­proves re­views is the same as it is un­der the EFF”.

She said the the pro­gramme is more broad-based than main­tain­ing macroe­co­nomic sta­bil­ity, and the goal is to achieve higher growth.

“So there are re­forms that are as­so­ci­ated with achiev­ing those goals,” the mis­sion chief said.

Asked if the IMF should make a re­duc­tion in crime a con­di­tion­al­ity of the new pro­gramme, Dr Ra­makr­ish­nan pointed to an Ar­ti­cle IV con­sul­ta­tion com­pleted in June, in which they un­der­took a growth di­ag­nos­tic study which showed that crime was the num­ber one growth im­ped­i­ment in Ja­maica.



“I think there is broad-based recog­ni­tion that some­thing needs to be done about it. But this is also a huge do­mes­tic prob­lem. It is not some­thing that the IMF, for ex­am­ple, can say do­ing X, Y or Z is go­ing to solve the prob­lem. This takes time, this takes re­sources, this takes a com­mit­ment. There’s a lot of di­men­sions that needs to be cov­ered in or­der to achieve suc­cess in re­solv­ing crime,” the mis­sion chief said.

“For us to be putting con­di­tions on crime, know­ing how com­plex this is­sue is ... we are not crime ex­perts, so we wouldn’t know what would be the right con­di­tions that we should be plac­ing em­pha­sis on,” she added.

How­ever, Dr Ra­makr­ish­nan said they sup­port the Gov­ern­ment’s ef­forts to solve crime, and “we do con­sider it as a very im­por­tant part in or­der to reach the growth ob­jec­tives that they have set for them­selves. We high­light this as a prob­lem that needs to be tack­led, and that it is crit­i­cal for se­cu­rity is­sues to ad­vance in the con­text of the new ar­range­ment.”

IMF-Ja­maica Cal­en­dar

OC­TO­BER 2016

Com­ple­tion of staffing of Tax Ad­min­is­tra­tion Ja­maica as a semi-au­ton­o­mous rev­enue author­ity.

IEx­e­cu­tion of trans­fer pric­ing im­ple­men­ta­tion strat­egy to be­gin.

ICom­plete draft­ing of reg­u­la­tions to im­ple­ment the Spe­cial Eco­nomic Zone Act.

ICom­mence hir­ing of the Spe­cial Eco­nomic Zone Author­ity’s man­age­ment team.

ICash trans­fers for in­tragov­ern­ment trans­ac­tions, which can be re­placed by jour­nal vouch­ers, will be elim­i­nated.

IBank of Ja­maica will start equal­is­ing the re­serve re­quire­ments for for­eign cur­rency and do­mes­tic cur­rency de­posits in the bank­ing sys­tem.


A new pro­cure­ment man­ual will be pre­pared with the as­sis­tance of the In­ter-Amer­i­can De­vel­op­ment Bank.


Phase III of the Cus­toms Act will be tabled in par­lia­ment.


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