Procurement bottlenecks continue to impact capex - EPOC
Jamaica's fiscal performance remains positive, driven by better than expected tax revenue inflows attributable to improved tax compliance as well as improvements in macro-economic factors and less-than-anticipated government expenditure, according to co-chairman of the Economic Programme Oversight Committee (EPOC), Keith Duncan.
However, with capital expenditure of $29.9 billion for the fiscal year to December at $5.4 billion or 15.3 per cent lower than budget, Duncan said the slow implementation of projects was in part occasioned by procurement bottlenecks, including bureaucratic red tape.
He said that while EPOC will continue to monitor government expenditure, and in particular capital expenditure given its importance as one of the main drivers of economic growth, the Economic Growth Council was focused on getting the government's procurement process to be more efficient to improve the business climate.
EPOC has in the past expressed concern about the previous government's ongoing cutback in capital expenditure to help to meet the primary surplus under the economic support programme with the International Monetary Fund (IMF).
For the fiscal year to December, Jamaica generated a primary surplus of $76.6 billion, exceeding the December 2016 target of $54 billion by $22.6 billion, or 42 per cent, said Duncan, who released the third communique of EPOC at JMMB's offices in New Kingston yesterday.
Current members of EPOC are monitoring programme targets under Jamaica's three-year precautionary standby agreement (PSBA) with the IMF.
Duncan said tax revenue intake remained buoyant with collection of $322.1 billion for the fiscal year to December, exceeding the target of $300 billion, but total expenditure trailed the target of $384.7 billion by $9.2 billion or 2.4 per cent.
Non-borrowed net interna-tional reserves stood at US$1.66 million at the end of December, exceeding the target of US$1.41 million, while the calendar year inflation rate of 1.7 per cent was well within the target range of one per cent to nine per cent.
The Government has met the two structural benchmarks for the review period, namely, appointing two external members to the Financial System Stability Committee and submitting to Cabinet proposed new rates and bands for property taxes based on the 2013 land valuations.
As to whether the submission to Cabinet of the property tax rates and bands is an indication that the Government might implement it in the upcoming fiscal year, Duncan said "we know there had to be a review done. In terms of if that will be one of the measures that is implemented, I can't say."
He said the Government is on track to meet both financial sector-related structural benchmarks for the January to March 2017 quarter, that is, to issue for public comment by this month a consultation paper for a resolution framework for systematically important financial institutions in the event of failure, and to establish a financial inclusion council by March.
Duncan said EPOC concluded that Jamaica's economic growth continued to be positive and that was underlined by a stable Jamaican dollar and very moderate inflation rates.
According to the Bank of Jamaica foreign exchange trading summary, the Jamaican dollar traded at$127.96 to the United States dollar on Monday, continuing its gradual appreciation from the $129 mark.
"With the positive trajectory in the fiscal and monetary results and the sustained success in meeting the timelines for the structural benchmarks and measures under the PSBA, we are very hopeful that we will continue to build on this solid platform going into the second review period ending June 2017," EPOC said.
Duncan said it is expected that the IMF team will be conducting the first review of end-December 2016 performance criteria between this month and March.