KINGSTON, Jamaica (AP) — Jamaica and the International Monetary Fund expect to begin negotiations in the coming weeks on a new deal as grim economic forecasts pose significant dangers for the debt-schackled Caribbean island, officials announced Tuesday.
At a press briefing in the capital of Kingston, Finance Minister Peter Phillips and IMF mission chief Luis Breuer said there is a worsening economic environment and they have a broad agreement of Jamaica's many challenges arising from soaring public debt and low economic growth.
"Our fiscal accounts are worsening now and we have to take control of the problems as fast as we can," said Phillips, a Cabinet member in the nearly month-old government of the People's National Party, which dominated Dec. 29 national elections and was returned to power after four years in opposition.
Jamaica's towering debt and the impact of the global recession led the previous Jamaica Labor Party administration to seek assistance from the IMF in 2010. It helped the government carry out a debt restructuring and provided $1.27 billion in a standby loan.
But that deal is due to expire in the next few months. The Jamaica Labor Party administration rarely disclosed specifics about the agreement's progress as it missed performance reviews over the past year.
Breuer, whose IMF team has been in Jamaica for a week, said the new government has indicated that they are working on the early implementation of a set of policies aimed at chipping away at the island's colossal debt ratio while stimulating growth and job creation in a sustainable way.
Jamaica owes creditors roughly $18.6 billion, some 130 percent of gross domestic product. That's a heavier load than crisis-hit Italy faces.
For years, over half the government's budget has been dedicated to paying the debt, and that has forced the government to scrimp on schools, hospitals and infrastructure.
"We're looking forward to being useful to Jamaica but we understand that the country is led by Jamaicans and the plan has to be made by Jamaicans. Our role is to ask questions and see how this plan would be effected by developments in the international economy," Breuer said.
Breuer warned that the global economic situation could cause "unprecedented dangers for Jamaica."
Last week, the Washington-based IMF announced that it's aiming to increase its financial firepower by around $500 billion so it can issue new loans to help ease what it sees as a worsening global financial crisis.
Neither Phillips or Breuer would say whether painful austerity measures will likely have to be taken in Jamaica this year.
Phillips plans to lead a government team to Washington next month to meet with the IMF and other international partners. The IMF mission will then return to Jamaica in late February to undertake a more detailed economic evaluation. Negotiations on a new deal are expected to begin after that, according to Phillips.
