In its latest review of Jamaica’s extended fund facility, the International Monetary Fund (IMF) observes that “While societal support for the programme remains broad, several stakeholders stressed the importance of ongoing consultation in designing reforms.

“The high pace of reform thus far has benefited from consultations between the authorities and domestic organisations, as well as the monthly feedback offered by the Economic Programme Monitoring Committee, with representatives from a range of sectors. Several stakeholders noted that both the quality and acceptance of reforms hinged on maintaining an effective partnership.”

A mechanism for achieving the effective partnership suggested by the IMF already exists in the Partnership for Jamaica headed by the prime minister and including the business community, union movement, civil society and the Opposition.

The IMF further notes that “Investor confidence remains frail and reform fatigue could set in if ongoing painful reforms and real wage compression do not result in more rapid job creation and income growth”. This, of course, is true, as any Jamaican worker will admit to being very “fatigued” with the IMF programme.

However, a key but extremely difficult step vital to the success of the IMF programme, and without which all the pain will have been in vain, remains to be taken. This is the modernising of the public sector to help reduce the wage bill further from 10 per cent of GDP in 2014 /2015 to nine per cent in the upcoming budget.

The wage restraint agreement with civil servants, which has frozen wages since March 2012, expires in March 2015. While the IMF advises that “the authorities aim to meet the objective for 2015/2016 through continued wage restraint in the upcoming wage negotiations and reforms to modernise the public sector”, this will understandably be an extremely difficult sell to the public sector unions.

However, there are no other options. As the IMF itself articulated quite clearly in its article 4 report earlier this year, Jamaica came dangerously close to a simultaneous debt, financial and currency crisis in 2013. In such a grim scenario, whether government employees got a pay increase would unfortunately be the least of their worries. It would be more a question of whether they got paid at all, or how many even had a job afterwards.

It is still not widely recognised that as a result of the two-and-a-half debt exchanges, Jamaica’s interest costs have fallen to 7.5 per cent of GDP, or a full one quarter less than the current public sector wage bill of 10 per cent of GDP. This, in fact, sharply understates public sector costs, as it does not include pensions, at roughly two per cent of GDP and climbing.

In short, the overall cost of the public sector is nearly two-thirds more than the interest bill. This is the opposite of the situation not long ago, when sharply rising interest costs substantially exceeded the overall wage and pension bill. In addition, central government capital expenditure, the fuel of growth, has already been cut sharply, and was already woefully inadequate to fuel future economic growth.

Jamaica no longer has the ability to run fiscal deficits to pay for large catch-up wage increases, and appears to have reached its taxable limit due to a very depressed economy. In such an environment, a reinvigorated partnership for Jamaica is essential if we are to avoid the reform fatigue about which the IMF is concerned, and restore still depressed business confidence.

A key way to strengthen the process would be to build on the trust already created in the partnership to increase the dialogue and create shared understanding on difficult but necessary reform issues.