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IMF board approves US$80 million drawdown for Jamaica

Published:Friday | June 17, 2016 | 6:35 PM
The Board met today to consider Jamaica’s progress under its Extended Fund Facility.

The Executive Board of the International Monetary Fund (IMF) has approved a US$80 million drawdown for Jamaica after considering the 11th and 12th review of its economic reform programme.

The latest disbursement brings to US$748.2 million the total amount received by Jamaica under the programme so far.

The Board met today to consider Jamaica’s progress under its Extended Fund Facility.

IMF deputy managing director and acting chair, Mitsuhiro Furusawa, repeated the endorsement of the new administration’s income tax plan which was expressed by the Fund’s review team in Kingston last month.

READ: Bold and essential ... IMF approves Budget and tax plan

IN PHOTO: Finance Minister Audley Shaw (left) greets Bert van Selm (right) resident representative of the IMF while mission chief, Dr Una Ramakrishnan looks on after a press briefing held at the Ministry of Finance and Planning in Kingston

He says the phased personal income tax reform is a bold step to shifting the tax system from direct to indirect taxation.

The IMF deputy managing director says proper execution of this reform is critical to ensuring revenue neutrality and safeguarding the revenue base.

But Furusawa says strengthened and targeted conditional cash transfers will help mitigate the impact of the reform on the low-income population.

In the meantime, the IMF board says concrete reforms are needed to sustainably reduce the government's wage bill, which continues to crowd out priority social and infrastructure spending.

It also says Jamaica’s growth remains weak and unemployment is still high.

According to the IMF, Jamaica should now focus on facilitating private sector development by expanding financial access and reducing financing cost, lowering energy cost, maintaining external competitiveness, reducing tax compliance costs, and improving public sector resource allocation.