KINGSTON, Jamaica: Prime Minister Bruce Golding has denied suggestions that government is in a crisis and the medium term program is in trouble, because of the tabling of the First Supplementary Estimates four months after the 2011/12 Budget.
“The immediate issue that informed the Supplementary Estimates, was the need to make provisions for payment to public sector workers of (the) seven per cent increase on their wages, which was not contemplated when the (original) estimates were presented,” said Golding.
He was responding to comments from Opposition Spokesperson on Finance, Dr. Peter Phillips, in the debate on the first Supplementary Estimates for 2011/12.
Golding also commented on the outstanding quarterly reviews to be undertaken by the International Monetary Fund (IMF) for 2011.
“In the IMF agreement there are nine quantitative targets. We have met all, with the exception of the primary balance. In fact, some of the targets we have out-performed. With this seven per cent that we now have to include in the budget for payments to public sector workers, our primary balance target is not meetable.
“Therefore, we had to approach the IMF to say we need an adjustment in the target, particularly the primary balance, because with the seven per cent that we now have to pay the public sector workers, we cannot achieve that target; we need some space, we need a little elasticity, a little adjustment to the program,” he said.
Golding said the IMF was not unwilling to work on the adjustment. However, they raised a concern which the government had to address.
“What the IMF has said is, if you have a disturbance in the target at this stage, you have to indicate how you are going to manage to make that back up in the medium term, particularly because the seven per cent that we have had to make provisions for in this year’s budget is not a one-off expenditure. That $9.2 billion is going to be there next year and the year after that.”
The Prime Minister said that it is the government’s job to reconfigure its program, to be able to say to the IMF, “now, look, we are seeking an adjustment in this target for the current state of the program, but this is what we would do to get back in line through the medium term and this is how we are going to sustain the additional expenditure”.
He pointed out that there are adjustments that have to be made, but they are the subject of negotiations.
“The restructuring of the program is something that we are working on. The reviews have not taken place, because the circumstances have not put us in a position where we are able to go and present and say here is the reworked program,” said Golding.
He concluded, however, that the government is confident that it will be able to achieve the timeline that it has set.