The importance of trust and the IMF negotiations

Friday, January 27, 2012

THE move by Finance Minister Dr Peter Phillips to make his second public statement to the Private Sector Organisation of Jamaica (PSOJ) on the importance of strengthening the State's partnership with the private sector is encouraging, given that the PSOJ and the People's National Party (PNP) Government of the 1970s had a strained relationship.

We agree that such a partnership is urgently required to help put Jamaica on a path to sustained economic growth.

We further agree that such a paradigm shift is even more urgent if Jamaica is to negotiate a path through an increasingly risky and unstable global economic environment.

Minister Phillips correctly emphasised that any new paradigm will require a much greater degree of trust, confidence and collaboration than we have seen in the past.

We would go further and suggest that what we need is not just meaningful collaboration, but a true partnership if Jamaica is to survive the rocky road ahead. Such a partnership will need to be more than just the private sector, unions, government and civil society sitting around a table.

Indeed, we will take the liberty of assuming that Minister Phillips meant a broader definition of partnership among stakeholders in the economy than just the private sector and unions. This definition could include a more unified private sector (showing a respectful understanding of their differing interests), a union movement that puts national interest above their respective party affiliation, and less adversarial politics than we have seen in the past.

In addition to his wish for a more proactive private sector focused on long-term investment, Dr Phillips also called for a more responsive and responsible public sector. The bottom line is there is a need for a renewal of trust between the Government and the private sector in both politics and business.

Minister Phillips has observed that the agreement between Jamaica and the International Monetary Fund (IMF) has died, but is not yet buried. Critically, the failure to successfully complete the Stand-by Arrangement resulted in the non-disbursement of multilateral funding of US$220 million from the Inter-American Development Bank, and grant funding of approximately $60 million from the European Union.

Like Minister Phillips, we hope and indeed expect that progress on the IMF negotiations will help unlock these and other additional funds.

As a consequence of this failure of which Dr Phillips speaks, a new agreement now has to be negotiated.

The timelines of this agreement, therefore, become very important. Cabinet meets next week in retreat to discuss the IMF meetings, following which the economic team flies to Washington, DC.

Minister Phillips carefully noted that it is only after the detailed assessments of Jamaica's position are prepared — projected to be at the end of February — that Jamaica will enter formal negotiations with the IMF. As he rightly observed, Jamaica can't be expected to go into a negotiation without a full understanding of our current position and the ability to understand the financial impact of any new proposals. For example, the supplementary budget will be due in a few weeks' time.

We commend him for taking such a cautious, balanced approach. We also agree that it would be a bad negotiating practice to advertise our end point to the IMF at the beginning of the negotiation.

We wish Dr Phillips good luck.

Do/Would you disclose details of your salary with your spouse?
	Yes
	No

View Results
Results published weekly in Sunday Finance

Username:
Password:

Water woes to affect sections of St Catherine and the Corporate Area

The importance of trust and the IMF negotiations