Onwards to IMF - Omar, Audley battle the approach
Published: Sunday | July 12, 2009
Shaw (left) and Davies
Daraine Luton, Senior Parliamentary Reporter
WITHIN TWO weeks, finance minister Audley Shaw is expected to jump into heat of the discussions with the International Monetary Fund (IMF) as the Bruce Golding administration forges ahead with plans to seek balance of payment support from the multilateral lending organisation.
Shaw told The Sunday Gleaner yesterday that he expects to make "a very strong Cabinet submission by the end of July".
"The hard discussions will be taking place long before the end of the month," Shaw said.
If accepted by Cabinet, the submission would mean a re-engaging of the IMF by Jamaica.
The country ended its borrowing relationship with the IMF in the 1990s, citing harsh conditionalities.
But, said Shaw, the posture of the IMF and the nature of conditionalities have changed. He also said that the lending institution has been instrumental in Jamaica's ability to borrow nearly $1 billion from other multilateral institutions last year.
"We could not have got that money from those multilateral institutions last year unless the IMF agreed that we are on the right track.
"We are well on our way ... the difference is that it is balance of payment support that is coming into the picture now," Shaw told The Sunday Gleaner.
The collapse of the international capital market has left Jamaica's economy in dire straits.
Shaw told The Sunday Gleaner that should Cabinet give the IMF the green light, the country's application may not be considered until September as the IMF would be on recess during the month of August.
However, while Shaw takes aim at the balance of payment support from the IMF, the Opposition People's National Party (PNP) has questioned his absence from the discussions with the IMF under way in Washington.
Senator Don Wehby, minister without portfolio in the Ministry of Finance, who, at the end of this month will be ending his stint of public service, is leading the discussions at the meeting. Also missing from the discussion is Bank of Jamaica Governor Derick Latibeaudiere.
Exploratory talks
Yesterday Shaw stressed that the talks in Washington are merely exploratory, but that has found little resonance with Opposition spokesman on Finance, Dr Omar Davies.
"The prime minister has said to the group working towards a social partnership that they have to hurry to get their application in because others are in the line ahead of them ... I don't know what he means by exploratory. That is a totally different view-point from what the prime minister has expressed," Dr Davies told The Sunday Gleaner yesterday.
In a statement last week, Davies said: "It is inexplicable that Minister Shaw is not actively involved in a hands-on way in negotiating the terms of the loan that the Government is trying to raise from the IMF.
"Given Jamaica's unhappy history of borrowing from the IMF, which was successfully ended in the 1990s by the PNP administration, the minister's peripheral involvement in this major policy shift must be explained," Davies said.
The finance minister said that Davies' statement which questioned his absence from the Washington talks is "quite simply mischief making for political point scoring".
Yesterday Dr Davies said he may not comment on a response from the finance minister.
"I play in a different league from Minister Shaw ... community league is different from premier league," Davies said.
Financial analyst Ann Shirley has, however, scoffed at Shaw's reason for staying away from the Washington talks.
"How can you have the biggest crisis the country has faced and we are sending a B team instead of the A team?" she asked.
Added Shirley: "Even if they are exploratory, the situation is so bad you are going to be talking about cuts in expenditure and some serious repercussions."
The Financial Gleaner reported last month that the proposed programme was submitted to the Cabinet and that Government will be seeking to borrow US$1.2 billion over three years under the IMF standby facility.
daraine.luton@gleanerjm.com
THE INTERNATIONAL Mone-tary Fund (IMF) has grave concerns about Jamaica's high interest rates.
Finance Minister Audley Shaw told The Sunday Gleaner that the issue is a major one for the multilateral lending institution but declined to say whether a reduction is among the conditionalities it is demanding.
"The interest rates is a concern of the IMF as it ought to be a concern to everybody in Jamaica, including the people who lend money to the Government of Jamaica," Shaw said.
The national treasury now offers 21.05 per cent on six-month bills.
According to Shaw, Prime Minister Golding discussed the desire to reduce interest rates during a meeting with leaders of industries in Jamaica this week.
"Interest rates have to go down. There are no justifiable reasons why the interest rates have to be where they are when the inflation rate annualised now is less than 12 per cent," Shaw said.
The decision by central bank governor Derick Latibeaudiere to increase interest rates last year to protect the dollar was a bitter pill for the finance minister.
However, yesterday, Shaw said Latibeaudiere "understands the sentiments that this thing can be done. He has to work on the pace and the timing".
Omar Azan, president of the Jamaica Manufacturers' Associa-tion (JMA) told The Sunday Gleaner that it is very critical for the interest rates to be lowered.
"I don't think we needed the IMF to tell us to make a move," Azan said.
He added: "It is something that is welcome if it is pre-condition in terms of getting funds from the IMF. I know going to the IMF means that we are basically scraping pot bottom but if nothing else comes out of it certainly the lowering of interest rates would be positive."
Minister Shaw has declined to say what parameters are being discussed by the team, led by Senator Don Wehby, that is meeting with the IMF in Washington. However, he said that it involves the country outlining to the multilateral organisation a short- to medium-term plan for the country's economy.
