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Shaw to speak on IMF test

Published:Thursday | April 8, 2010 | 12:00 AM

Daraine Luton, Senior Staff Reporter

FINANCE MINISTER Audley Shaw should will today tell Parliament that Jamaica has come within striking distance of the first International Monetary Fund (IMF) performance target by keeping its primary balance in check.

The Government was required by the IMF to keep the primary surplus to $68.9 billion, and based on preliminary information the primary surplus came in at $68.1 billion.

If these preliminary figures hold true, it could pave the way for a nod from the IMF, which would mean that the country would have passed its first IMF test.

However, the IMF test will be only one aspect of Shaw's presentation when he opens the 2010-2011 Budget Debate.

Financial analyst Dennis Chung says Shaw can ill afford not to address the issue surrounding whether Jamaica has passed the IMF test.

Junior finance minister Arthur Williams had declared a pass last week but Dr Wesley Hughes, the permanent secretary in the finance ministry, says the result may not be known for weeks.

Meanwhile, Chung has also contended that Shaw must tell the nation, in clear terms, whether Jamaicans should brace to pay more user fees at government agencies and departments.

$5-6 million short

Based on the IMF projections it would imply that the Government will need another $5-6 million in taxes or user fees. Despite three tax packages last year, followed by a promise of no new taxes from Shaw, total revenue for the fiscal year fell $38.5 billion short of the $339 billion projected.

Shaw has indicated that he will be using his Budget presentation this year to speak about revenue compliance. The finance minister is also expected to speak to medium-term issues, such as the Jamaica Debt Exchange (JDX) and the fiscal responsibility framework.

Last year, Shaw told Parliament that an estimated 200,000 Jamaican's who should be on the tax roll were tax cheats. Then the minister announced a tax amnesty which ended in October, 2009 to allow persons to become tax compliant.

The finance minister has already tabled a $504-billion Budget. He has indicated that except for an increase in property tax Jamaicans should not expect any new taxes.

Last year, Shaw announced increase in the taxes on fuel, a broadening of the GCT base and and increase in the minimum income tax threshold.

Yesterday, Greg Fisher of Oppenheimer, a leading international broker of Jamaica's debt, told The Gleaner that the international capital market would be paying close attention to Shaw's presentation today.

"The market will be looking to see that Jamaica is on track with projections that were part of the IMF agreement," Fisher said.

Consistency required

He added that many non-Jamaicans had, in the past few days, been buying Jamaican bonds on the international market and "as long as the Budget and the discussion remains consistent with the Government's outlay this will continue".

For Jamaicans, though, Chung said the finance minister must "put the entire restructured budget and the IMF programme in terms of growth and the sectors in which the growth is to be expected".

Jamaica has entered into a 27-month agreement for a standby facility of US$1.2 billion with the IMF for balance-of-payment support. The agreement allows Government to access multilateral funds which Shaw has said is critical to restarting the country's growth engine, which has been hit by a wicked recession.