Jamaica has begun talks with the International Monetary Fund on a credit facility, but the island's finance minister, Audley Shaw, says that the discussions are merely pre-emptive to ensure that the country has an inside track should borrowing from the fund really becomes necessary.

Don Wehby, the minister without portfolio in the finance ministry, and central bank governor, Derick Latibeaudiere, started to map a potential framework of an agreement with International Monetary Fund (IMF) officials in Washington last week, Audley Shaw, the finance minister, has said.

"As of now, we are not in any need for IMF support," Shaw said Thursday at a forum organised by the brokerage house, Mayberry Investments.

"Our net international reserves remains in excess of US$1.6 billion, which is still holding steady," he said. "But because our earnings on foreign exchange have fallen out we are not remaining flat footed. We are not going to act as we are phantoms and we won't have any problems."

Jamaica, its economy long wobbly, has been hard hit by the global recession and the tight credit markets.

Aluminium demand falling

The island is one of the world's biggest producers of bauxite and alumina, but has lost around two-thirds of its production and earnings from the sector in the face of falling demand for aluminium in China and other economies.

Tourist arrivals remain relatively buoyant but hotels have had to discount heavily, squeezing earnings from the country's biggest foreign exchange earner. At the same time, increased unemployment and weakened consumer confidence in major economies have caused a decline in the amount of money Jamaicans living abroad send home.

It is against this backdrop that there have been suggestions that Jamaica - which expects to borrow up to $215 billion this year to help fund its $555.7-billion Budget - could be forced into an accommodation with the fund.

Jamaica had a long and often tumultuous borrowing relationship with the IMF, from 1977 to the mid-1990s, with critics often claiming fund's conditionalities caused as many problems than the ones they were designed to solve.

Major political event

So when the People's National Party administration stopped borrowing from the IMF it was a major political event, announced with great fanfare by then Prime Minister P.J. Patterson at a party conference.

Since then, though, the prevailing view is that the IMF moderated its positions, being more inclined to craft rescue programmes to fit specific circumstances rather than its past one-size-fit-all approach.

But even at that Shaw was at pains to point out that Wehby and Latibeaudiere did not give any specific undertaking during their Washington trip.

"The purpose of that mission was simply to say to the IMF, 'If we need it, what do we have to do to get it?' ," Shaw said. "We are not going to wait until our balance of payment was to go to zero," he said. "There is a threshold below which we will not allow it to go and we are quite prepared to talk to the IMF to ensure that our balance of payment is at a reasonable level."