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Jamaica to pass 13th IMF test, but tax break listed among major challenges

Published:Friday | August 12, 2016 | 8:33 PM

The committee monitoring Jamaica's programme with the International Monetary Fund (IMF) says while key indicators are pointing in the right direction, finding money to fund the tax break programme is a major challenge.

In its latest communique, the Economic Programme Oversight Committee (EPOC) said, among other things, that the primary surplus target is being met while Net International Reserves is in excess of 23 weeks of imports. 

EPOC says it expects IMF staff review of the 13th quarter which is currently being done to conclude with a positive recommendation to the IMF Board.

However, it has pointed to three main challenges. 

Among them is what it says is the challenge to fund the further reduction in the Personal Income Tax threshold without disrupting the primary surplus generation or investor and consumer confidence with punitive taxes.

According to the committee, the tax break is to cost an additional $16 billion starting in April next year.

For this fiscal year, the government imposed more than $13 billion in taxes to fill the gap left by the tax break.

The first phase took effect last month with the  second leg to be implemented next year April.

EPOC has also identified challenges with regard to reducing the ratio of debt to gross domestic product to an acceptable level as well as public sector reform to free up $20 billion for investment in infrastructure.