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Poor Jamaicans want help! - IMF urges Gov't to increase, expand PATH

Published:Tuesday | September 20, 2016 | 12:00 AMJovan Johnson

More poor and vulnerable Jamaicans are in need of greater welfare assistance from the Government to reduce the impact from the fallout linked to the controversial tax break, the International Monetary Fund (IMF) has said.

The IMF issued the declaration yesterday as its board approved the 13th review of the Jamaica's programme with the Fund, paving the way of the disbursement of J$5 billion to Jamaica.

But as it affirmed that the implementation of the economic reform programme remains on track, the Washington-based financial institution said there are risks to the programme and there is a need to "bolster social spending".

On that, the IMF said it is "imperative" that the Government fortify the social safety net, which means strengthening the Programme of Advancement Through Health and Education (PATH) - the administration's main social programme which entails conditional cash transfers.

 

TAX REFORM

 

The IMF said this strengthening and widening the coverage of PATH is "urgent, particularly as the ongoing tax reform to rebalance from direct to indirect taxes is cemented. More generally, with one-fifth of Jamaica's population currently living in poverty, the programme needs a significant boost".

In documents released yesterday, the IMF said the Government is "examining the scope for increasing the level of benefits in the short run, and putting in place a medium-term plan for improving coverage and lower self-exclusion".

According to the Fund, "expenditures on PATH total about 0.3 per cent of GDP - relatively low in the region. While the programme targets the population groups where its impact is greatest (pregnant and lactating women, children, disabled adults, and the elderly), both the coverage and the level of PATH benefits should be increased.

"For instance, in the bottom decile (poorest in population), only 58 per cent live in a household that receives PATH benefits. Coverage is especially weak among the disabled; only 10 per cent of them in the bottom decile are PATH recipients. For families receiving benefits, those levels are also low - less than five per cent of household expenditures in the bottom decile"

Effective July, the personal income tax threshold increased from $592,800 to $1,000,272. It will move to $1.5 million next year April at a cost of $16 billion, or 0.9 per cent of GDP.

jovan.johnson@gleanerjm.com