Whichever party wins must continue economic reforms
The Economic Programme Oversight Committee (EPOC) has reiterated that whichever party forms the Government following the February 25 general election should commit to continuing the reforms under Jamaica's four-year economic support programme with the International Monetary Fund (IMF).
Adopting a position taken by Fitch Ratings agency that the "the fiscal policy stance will remain broadly unchanged after the general election ... and that the next government will adhere to the IMF programme through March 2017," EPOC co-chairman Richard Byles said "that pretty much summarise EPOC's point of view, too".
Fitch, which earlier this month upgraded Jamaica's long-term foreign and local currency IDRs (International Depository Receipts) to B from B- and revised the rating outlook to stable from positive, said that continuing the fiscal policy stance was a key assumption underlying that upgrade.
"So whichever party forms the Government, that is the hope that we certainly have, and I think all Jamaica should have, because we have made a lot of sacrifices to get where we are today, and we ought to keep achieving these targets and reap the benefits in the near future," said Byles.
"So whichever party, let's just recognise that we have to do this," he added, while addressing a press conference at Sagior Life, New Kingston yesterday.
A BIG CHALLENGE
Byles made the observation after he was asked about a proposal by Opposition and Jamaica Labour Party leader Andrew Holness to increase the income tax threshold from $600,000 to $1.5 million if that party forms the next government.
He said that while he would rather not comment on that suggestion, "What I'd point to ... is that challenge we have in meeting even this primary balance. It's a big challenge to meet. Any proposal that gives up revenues has to have an accompanying measure to fix that gap because that gap will make us miss the primary balance target."
Byles said he was not commenting on whether the proposal was good, bad, whether it can be funded or not.
"I'm just looking at it from an IMF point of view, EPOC point of view. It's a tight, tight battle to keep the current targets, and if we were to give up revenue, we must have a way in which we can recoup that revenue," he said.
Byles also refused to be drawn to comment on the manifestos published by the incumbent People's National Party and the JLP.
"Manifestos can say anything, but policy is another thing," he said. "So what is written on a piece of paper for an election purpose it's not necessarily something we are going to comment on. If either party translates that into policy and that policy offends achievement of these targets, then you will hear a comment from EPOC," he said.
Byles earlier reported that Jamaica surpassed the IMF target for the primary surplus, which stood at $66 billion for the quarter to the end of December 2015, just under $6 billion above the target of $60.7 billion.
NEXT VISIT BY IMF
The Net International Reserves was US$2.44 billion, also surpassing the IMF target of US$$1.64 billion.
"So all other things being equal, I expect that we will pass the 11th review by the IMF," he said
The IMF team was scheduled to be in Jamaica this month, "but with the pending general election, they have elected to come after the election and when a new government is installed, regardless of which party forms that new government," said the EPOC co-chair who released the 33rd communiquÈ of the non-public sector members of the committee at the briefing.
Tax revenues for the review period were $6.6 billion ahead of target, with the major taxes contributing to that performance being tax on interest, up $4.5 billion; special consumption tax, up $2.4 billion; company tax, up $1.7 billion and general consumption tax, up $1.5 billion.
Taxes which underperformed were telephone call tax and customs duty, both of which were below target by $0.9 billion, as well as tax on dividends, which was $0.6 billion below target. Grants lag budget by $3.2 billion.
Expenditure for the fiscal year to December was $3.5 billion below budget. However, Byles said capital expenditure of $26 billion has almost caught up with the budget.
He said the last quarter - January to March - is a tough quarter for fiscal targets.
"We have to move from approximately $60 billion of primary surplus to $120 billion of primary surplus at March," he said.
"So in one quarter, we have to do what we have done in three quarters. It so happens that that's how government revenues are skewed, particularly taxes from companies and individuals," Byles explained.