Above: Jamaica Finance Minister Dr Peter Phillips (FP)

By the Caribbean Journal staff

Jamaica and the International Monetary Fund are making progress on a long-awaited agreement between the two sides, according to Finance Minister Dr Peter Phillips.

“We are at the point where we are sufficiently advanced that we have started to discuss a draft outline of a Letter of Intent and a Memorandum of Economic and Financial Policies, which would be the embodiment of the programme,” he said.

Over the past two weeks, the two sides have made what he described as substantial progress in advancing areas of “structural reform, including taxation policy and tax administration, pensions and wages, among other areas.”

Jamaica is working to arrive at a deal with the IMF by the end of 2012, Phillips said.

According to Jan Kees Martijn, the IMF’s mission chief for Jamaica, his team has made “substantial progress in identifying policies that could underpin a fund agreement.”

“I believe we have had a shared diagnosis of the economic situation,” Martijn said. “We have a shared understanding of the short-term vulnerabilities and longstanding structural challenges facing Jamaica, particularly the cycle of low growth and high debt that has affected the country.”

Martijn said the two sides agreed on the need for a Medium-Term Economic Programme that promotes high growth.

That would include “strong macroeconomic policies to foster stability and a sustainable position and that is also fostering, critically, social cohesion,” he said.

Martijn also said Jamaica and the IMF had “reached an understanding” on the elements of the growth agenda, and on several crucial structural reforms.

But whether the “shared understanding” and progress on identifying the “underpinnings” of a deal will result in one is not yet clear.

A technical team will soon be visiting Washington to continue talks with the IMF, according to Phillips.

“There is still work to be done in finalizing and agreeing on all the elements of the programme,” Phillips said. “There is a refinement of the language to be undertaken in relation to some of the clauses in the working draft. But overall, there has been substantial agreement on the basic framework of the programme that is to be agreed and which we consider to be a matter of high priority for us in the government.”

Martijn said the IMF is committed to working to reach an agreement.