It may be recalled that the previous Government had entered into an agreement with the I.M.F in 2010 for a stand-by facility and during the time leading up to a change of Government there was a lot of discussions as whether or not the Government had passed the various tests as stipulated in the agreement. It has now been over a year since that agreement has been in abeyance and the present Government has sought to reopen negotiations with the I.M.F for a new stand-by facility and a team has gone off to Washington to meet with the I.M.F.
There is no doubt that in formulating the Budget, the outcome of the I.M.F negotiations would form an integral part and therefore one can conclude that this is one of the reasons for the delay in the presentation of this year’s Budget .It should also be borne in mind that additional loans from the I.M.F could come with more stringent demands for significant structural reforms .In deed fiscal reform will be one of the main planks on which the Budget would have to be formulated and this is where the issue of tax reform comes to the fore . In this regard we are aware that a lot of work has been done by the Private Sector Working Group (PSWG) which has made its recommendations to Government and these are now being examined.
It is also important to mention that the negotiations are taking place at a time when the I.M.F has predicted a dismal outlook for the Caribbean with Jamaica being at the bottom in terms of economic growth. The I.M.F’s World Economic Outlook (WEO) Report has predicted a 3.5 % growth for 2012 for the Caribbean, down from the original figure of 4.3% which was projected last September. Further high public debt and weak tourism and remittance inflows continue to constrain the outlook for the Caribbean and a greater resolve is needed in reducing debt overhang in the Caribbean. The Report went on to state that both Jamaica and Barbados have the lowest expected growth this year of 1% and 0.9% respectively. However Barbados is expected to grow by 1.5% next year and 3.1 % in 2017 whereas Jamaica is expected to experience only 1% growth in 2013 and just 1.5% in 2017.
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