Nov 2009 Financial News

No assurances of an IMF deal in November - Golding deadline appears endangered

Nov 11, 2009

The International Monetary Fund (IMF), though it declared progress last week, is refusing to commit to November as the date to finalise and approve an arrangement for Jamaica, leaving open the possibility that the negotiations could drag on into December and maybe January.

IMF spokesman Andreas Adriano said the fund had "nothing to offer" when asked if the IMF board would consider Jamaica's application this month, giving fillip to market speculation that yet another deadline for concluding a deal would be missed.

Jamaica had initially expected to conclude a deal by October, later revised to November by Prime Minister Bruce Golding.

The shifting deadline has Jamaica's markets watching, somewhat nervously, how the IMF talks play out - including the approach to lowering interest rates. Last week, president of the Jamaica Securities Dealers Association, Anya Schnoor, commenting on the relative stability of the markets in the wake of Jamaica's latest credit rating downgrade, said what would really make investors nervous is if the IMF talks dragged on.

On Tuesday, the Bank of Jamaica, which named Dr Brian Langrin, director of financial stability and Maurene Simms, deputy division chief of financial institutions supervision, as its representatives in this week's round of talks, stressed that their focus in Washington would be on "financial system stability", which separate analysts say is likely a signal of reassurance to the market, especially those brokers who are said to be facing margin calls on bond accounts, or equally that the central bank was keen on ensuring a 'measured' approach to interest rates.

Jamaican mission

The Jamaican mission is being led by Darlene Morrison, deputy financial secretary in the Ministry of Finance with responsibility for economic management, and includes her colleague Pamella McLaren, senior director of the ministry's Debt Management Unit, as well as the two BOJ representatives. The mission departed Tuesday and returns Friday.

Trevor Alleyne, chief of the Caribbean division of the IMF, who was in Jamaica last week with a team from the fund, signalled Friday that the talks had advanced substantially, saying the focus of the October 27 to November 6 visit was on bringing down the fiscal deficit and putting the debt on a clear downward path.

"In this regard, marked progress has been made during this mission," said Alleyne.

Prime Minister Bruce Golding on the weekend, perhaps as a signal to the IMF ahead of this week's return visit to Washington said that he will follow through on tough measures and announced the appointment of Patricia Sinclair-McCalla to lead the job-cut programme.

Wages and interest charges are the two largest cost items weighing on Jamaica's operational budget. Of the near $201 billion spent running the government between April and September, $149 billion paid salaries and serviced the debt. The two items cost the government $14 billion more than all the revenue and grants collected - a total of $135 billion - over the same six-month period.

BOJ said Langrin and Simms "would deal with any issues regarding financial stability which may arise" in Washington.

Not considered top-level

With the absence of lead negotiator Dr Wesley Hughes and interim central bank governor Audrey Anderson, the team was not considered a top-level mission, said government sources.

Anderson who will run the central bank for a month until Brian Wynter's December 1 start, was included in the discussions last week, according to an IMF statement which listed the interim central bank chief among the top policymakers consulted, and has been part of the negotiating team under former governor Derick Latibeaudiere.


Source:
business@gleanerjm.com
Jamaica Gleaner
Wednesday November 11, 2009

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