EDITORIAL - Forget spin on the IMF

Finance Minister Audley Shaw's attempted clarification on the status of the Government's agreement with the International Monetary Fund (IMF) would have left Jamaicans just as confused as before his broadcast Sunday night.

For even after the minister has spoken we are not sure:

whether the US$1.2 billion standby facility the administration entered into early 2010 is still in place

if it is being extended beyond its original 27 months

whether an extension would be on the same terms as the existing agreement, or would require new performance criteria

whether a new agreement is being negotiated

what would be the specific parameters of those negotiations

if having done a bit of tinkering here and there to accommodate the public-sector back pay, the old agreement will be back on track with, perhaps, a few minor adjustments.

The point is that Mr Shaw is being too glib about whether the Government 'failed' or 'passed' the IMF economic tests for quarters ending December 2010 and March 2011.

Mr Shaw's position is that these reviews have not yet been done, so any suggestion that Jamaica failed the test "are erroneous and misguided". In fact, according to the minister, except for the $3.5 billion shortfall in the central government's primary surplus in the March 2011 quarter, "all other quantitative targets showed that they were either met or exceeded".

The reason for the delay of those reviews, Mr Shaw suggested, was to give the administration time to make budgetary adjustments for the $10 billion in retroactive wages to public servants this fiscal year, as well as to sort its medium-term economic programme, including the country's debt profile, and the lowering of public-sector wages to GDP.

Perhaps in technical terms, and based on Mr Shaw's interpretation, the current IMF tests for December and March were not passed. It may be true also that the review for the June quarter, which, under normal circumstances would now be under way, will be easily passed with flying colours.

Balance of payments support

However, these performance criteria are not ends in themselves. The fund itself provides balance of payments support, which in Jamaica's case was heavily front-loaded. But more important is that the IMF's imprimatur signals to multilateral financial institutions and donor agencies that the countries that have it are following sound economic policies and are safe to lend to. When the terms of an IMF agreement are breached, or for some reason the pact is derailed, even temporarily, these institutions, in the absence of an IMF waiver, halt their disbursements.

While there is, in this regard, no clarity on Jamaica's agreement with the fund, it is known that multilaterals have frozen their programme and budget for Jamaica, as was noted by the European Union and acknowledged by Mr Shaw.

The status of the IMF agreement, as we have argued, is more than political point scoring, or for Minister Shaw to prove that no test was failed under his watch.

The larger issue is about pulling Jamaica out of its economic funk and how the Government can mobilise Jamaicans around a strategy for this. Mr Shaw should start by ending the prevarication and spin and level with the Jamaicans - including on the Government's strategic stance on an IMF pact.

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