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| In a statement issued earlier this week, the IMF said its mission in Jamaica was making progress in discussions with the government, and will provide an update on the talks by the end of this week. | |
KINGSTON, Jamaica, November 5, 2009 - Jamaica's Prime Minister Bruce Golding has assured the country that the Government is close to resolving outstanding issues with the International Monetary Fund (IMF), which will enable it to proceed with its application for a US$1.2 billion standby loan agreement.
He said that the departure of former Governor of the Bank of Jamaica (BOJ), Derick Latibeaudiere, who had been leading the negotiating team, will not disturb the negotiations.
"With the appointment of Mr Brian Wynter as the new Governor, the leadership of the Bank of Jamaica is in safe and capable hands," Golding said, adding that Financial Secretary, Dr Wesley Hughes, is now leading the IMF negotiations on behalf of Jamaica and "his competence and considerable experience in such matters cannot be questioned."
The Prime Minister confirmed that a technical team from the IMF is currently in Jamaica, working with the Government on the fiscal, monetary and medium-term economic programme it has presented. He admitted that there are issues still being finalised with the Fund's team, primarily involving the pace of reduction in Jamaica's fiscal deficit projections as well as issues related to debt management.
"Our projections, of course, are tempered by the persisting uncertainty as to when the current recession will end and recovery can begin. Every suggested adjustment to our programme has to be carefully worked through to determine, as accurately as possible, the impact it will have and identify the policy measures required to support it," he said.
"We have every confidence that we are close to resolving these issues to enable our application to be presented to the IMF Board."
In a statement issued earlier this week, the IMF said its mission in Jamaica was making progress in discussions with the government, and will provide an update on the talks by the end of this week.
"The IMF mission currently in Jamaica is working closely with the authorities toward developing a strategy to address current economic challenges and define policies that could be supported under an IMF Stand-by arrangement. These discussions cover both the current and next fiscal years and the medium term, and we are examining a range of policy options. We are continuing to make progress," it said.
There had been concerns voiced in some quarters that the dismissal of Latibeaudiere would have affected the IMF negotiations.
The former BOJ boss, hired under the former People's National Party (PNP) government, was fired last Friday because Golding said his administration found the interpretation and application of certain provisions of his contract were "unacceptable, embarrassing and repugnant".
Golding explained that while Latibeaudiere's basic salary at the end of October stood at J$14 million (US$159,271), his total compensation package amounted to J$38.3 million (US$435,722), in addition to a fully maintained motor vehicle; entertainment expenses; medical and life insurance; guaranteed pension; and other benefits given to non-contracted employees.
The Prime Minister said that it was in relation to Latibeaudiere's housing arrangements that the contract seemed most "absurd".
He related that the contract states that the Governor shall be provided with a fully furnished and maintained official residence, inclusive of household and gardening staff and "unlimited expenses for telephone, electricity and water." It also stated that, in the event that an official residence is not provided, the Governor shall be paid rent for the premises he occupies based on the average rental value determined by two independent valuations.
The BOJ purchased a house in upscale St Andrew, as an official residence for the Governor, at a cost of J$22 million (US$250,284), but the Govenor suggested that the house be sold. In the absence or non-occupation of an official residence the Bank had to revert to paying the Governor rent and maintenance totaling J$8.4 million (US$95,563) for the house he occupied.
The Prime Minister said that between 2006 and 2008, the Governor secured loans totaling J$55.4 million (US$630,261) at an interest rate of five per cent to build a house in another section of St Andrew. He added that there were several troubling issues surrounding the loans, including the lack of evidence of a loan agreement with the Bank, a matter which has attracted the attention of the Auditor General.
"Research shows that this exceeds the compensation package for the Chairman of the Federal Reserve Board of the United States," Golding commented.
He said that his government considered the former Governor's compensation arrangements "unconscionable", "especially at a time when the country is undergoing such severe financial stress".
As a matter of principle, Prime Minister Golding said, the government could not continue those arrangements.
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