IMF cautions Gov't - Fund says Jamaica falling short in some areas

The International Monetary Fund (IMF) has expressed concerns about aspects of the Government's fiscal programmes.

While applauding the Bruce Golding administration for passing all the tests set for the third quarter under the standby arrangement entered into last year, the IMF has raised the red flag on some of the steps taken by the Government.

According to the IMF - in a report concluded on December 28, 2010, but released only last Friday - while the Government met all the quantitative performance targets at the end of September, there were some worrying signs.

"In the fiscal area, the September benchmarks related to the Central Treasury Management System (CTMS) reform were met. In the debt-management area, the benchmark requiring the hiring of a technical adviser and project manager for the reform programme was not met," the IMF said.

"Delays have also emerged with the public-sector rationalisation plan, as parliamentary hearings have continued beyond the time frame originally envisaged," added the IMF.

According to the IMF, despite the good performance under the programme through to the end of September, mounting spending pressures and delays in some fiscal reforms have required the adoption of corrective measures by the Jamaican authorities.

Expenditure pressures

The fund said it identified expenditure pressures such as the unanticipated purchase of new buses by the Jamaica Urban Transit Company after unsuccessful attempts to halt delivery; prolonged operational support from the Government for the Clarendon Alumina Production due to delays in completing the divestment of the company and the payment of outstanding salaries and allowances to public-sector workers.

It also listed cost overruns related to highway construction projects and higher-than-projected central-government utility bills which led to unbudgeted spending of 1.4 per cent of the country's gross domestic product.

"The (Jamaican) authorities concurred with (IMF) staff that the potential spending overruns reflected weaknesses in expenditure management that needed to be urgently addressed," claimed the fund.

The IMF endorsed what it said were several measures introduced by the Golding administration to offset the expenditure overruns.

According to the IMF, these measures included: "The postponement of certain capital projects, most notably the Palisadoes highway; cuts in recurrent spending including on travel, training, and advertising; a 60 per cent reduction in the issuance of non-humanitarian discretionary tax waivers and the introduction of differentiated tax rates on alcohol beverages, based on alcohol content."

Up to yesterday evening, there had been no official response from the Government to the IMF release.