THE INTERNATIONAL Monetary Fund (IMF) has expressed broad agreement with the country's economic policies but urged caution in lowering interest rates and controlling expenses.
Its 'Interim Staff Report' on the country's outlook is based on discussions held with local officials between April 20 and May 3 this year and is held under its Intensified Surveillance system. Under this, the IMF does not participate in the development of the policies but merely offers comments on their appropriateness.
"The Government's balanced budget target for this fiscal year, which is of landmark importance for Jamaica's strategy to reduce the debt burden, appears within reach," stated the report's executive summary, which was approved by IMF executives Caroline Atkinson and Matthew Fisher.
The report said the reductions in interest rates by the central authorities in the current financial year were appropriate. But with inflation still above international levels and prospects of global interest rate hikes, it advised caution with respect to the pace of further reductions.
CONTROLLING WAGE BILL
"The Government will have to devise policies during the current fiscal year to keep the wage bill under control following the expiration of the MoU in early 2006," the report said. A Memorandum of Understanding was signed between public sector workers and the Government, which capped wage increases in exchange for job guarantees.
"Strict control must also be maintained over off-budget expenditure and debt guarantees," it said. "The authorities are encouraged to implement fully, the planned restructuring of Air Jamaica. The recent adjustment of water tariffs and the establishment of an annual tariff review mechanism have also been important positive steps."
