With Jamaica returning to the IMF for loan funding in 2010, the government is advising Jamaicans to prepare for more taxes after the agreement has been signed ■

Even in the wake of new taxes being announced ahead of the holiday season, Jamaicans have been given early warning that when the government signs an agreement with the International Monetary Fund (IMF), it will have no choice but to impose new taxes as part of overall measures to contain expenditure and increase revenue.

In fact, Prime Minister Bruce Golding says the new taxes would have to be imposed almost immediately after the deal is reached.

“Up to the end of October our revenues were running J$17.8 billion (US$201 million) below projections. We have tried to contain our expenditure. We have actually tightened expenditure to the point where our expenditure is running J$7 billion (US$79 million)behind projections…but you will no longer have the facility to go to the market to say lend me an extra J$10 billion (US$112 million). We are going to have to close the gap in this fiscal year… So more taxes will have to come”, he said, ahead of his presentation today in Parliament when he is expected to provide an update on the IMF negotiations.

Golding explained that central to the IMF programme are performance targets that have to be met which is why the negotiations are taking so much time. These performance targets, he said must include getting the deficit down over the medium term.

“We are going to have to align our expenditure with our revenue. In the first year it is going to be significant but it is going to be continued over the medium term with some expectation that you will see a return to Gross Domestic Product (GDP) growth so that some of the adjustments that would normally be necessary at that stage will be covered by growth,” he said.

The Prime Minister said this would require the imposition of new taxes that can be collected almost immediately upon signing of the IMF agreement.

Golding said central to the programme is the intention to bring down interest rates, which would involve looking at the profile of our debt. He said Jamaica is paying the highest interest in the world with interest rates of up to 24 percent. He said Jamaica’s focus is not just how to endure the recession but was also about how to get the country on a path to recovery.

He said the vision for the transformation of the economy is not the role of the IMF.

“It is our job, as the IMF only comes in to provide you with assistance particularly in a time of crisis. Part of our problem is that the economy has not for many decades diversified itself to identify new spheres of growth that can have the multiplier effect to embrace other sectors of the economy,” Golding insisted, adding that the country must now move beyond the heavy dependence on bauxite and tourism.

Some of the areas that Government would be looking at in order to move the country forward will include securing new investments , the development of the creative industries, expanding agriculture through agro-processing and stimulating small and medium sized enterprises to provide new jobs, products and services.

Despite the challenges that face the country with the conditions that will accompany the IMF agreement, the Jamaican leader said the government will have to find creative ways of ensuring that new programmes can be implemented and cited as examples public private sector partnerships (Caribbean360).

Related articles:

1. Jamaica closer to IMF deal
2. Jamaican government imposes new taxes ahead of holiday season
3. Jamaica reshapes tax package after public outcry
4. IMF to Jamaica: “There will be pain”
5. Jamaica: Subdued tax protests ahead of Opposition’s budget reply

Antillean · Bridgetown, Barbados

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