IMF OKs wage agreement, but won't budge on targets
Published:Friday | July 8, 2011 | 12:00 AM
Arthur Hall, Senior Staff Reporter
The International Monetary Fund (IMF) has grudgingly accepted the Government's decision to start paying public-sector workers their outstanding seven per cent increase this fiscal year.
However, the IMF has made it clear that there will be no adjustments to the macroeconomic targets it has set for Jamaica while the Government pays the civil servants more than $10 billion starting in September.
Prime Minister Bruce Golding reported on the IMF stance as he addressed the signing of the payment agreement at Jamaica House yesterday morning.
"What we have committed to this agreement that we are about to sign is something that we have had difficulty in securing within the parameters of the current economic programme that we have (with the IMF)," Golding told union leaders minutes before putting pen to paper.
"On my recent visit to Washington, this was a source of major, major, concern to the IMF because they felt it was going to derail the programme and - to put it bluntly - it was causing on their part, a lack of confidence in the resolve of the Government to pursue and implement the programme," added Golding.
According to the prime minister, he had to explain to the IMF that the seven per cent increase was a contractual obligation and that public-sector workers were facing serious financial difficulties which the increase would help to address.
No IMF adjustments
It will cost the Government $10.4 billion to finance the increase this fiscal year, impacting on several of the IMF targets.
"(The IMF's) ultimate position was that, not that they would make adjustments to the programme to accommodate it, but they would accept and agree for us to make the internal adjustments that are necessary to accommodate (the payment)," said Golding.
He said the Government would make the adjustments to ensure that the targets for areas such as the primary balance and the fiscal deficit are met.
Golding did not say what adjustments would be made to the Budget but Finance Minister Audley Shaw later told The Gleaner that he would be cutting and carving the Government's spending plan to make room for the payment which is not budgeted for.
Shaw is expected to take the adjusted expenditure plan to Parliament in September.
But Golding made it clear that, while the Government is determined to ensure that it does nothing to cause a collapse of the IMF agreement, it is committed to paying the civil servants based on the agreement signed yesterday,
According to Golding: "The national interest is not simply confined to achieving IMF targets. The national interest must also include ensuring that we have a satisfied, motivated public-sector workforce."