Gov’t to Undertake Policy Reform to Address Low Growth and High Debt

The Government will be undertaking significant fiscal policy reform including the implementation of a Fiscal Responsibility Framework (FRF), in order to address low growth and high debt, and to boost revenue collection.
“The FRF seeks to introduce the principles of responsible fiscal management and aims to improve fiscal transparency by requiring that firm targets are set and kept,” Finance and Public Service Minister, Hon. Audley Shaw, said as he opened the debate on the Supplementary Budget on Tuesday (Sept. 29) in the House of Representatives. He said that the FRF is to be presented to Parliament by December 2009.
Other policy reform measures being examined include: broadening the tax base; reducing the level of incentives and relieving provisions with respect to various tax codes; and amalgamation of statutory payroll deductions.
“In addition, the Government is currently undertaking a tax expenditure study with a view to revising our incentives regime,” the Minister told the House.
Noting that the reform of public bodies is part of the process, Mr. Shaw stated that they have been a major drain on the Government’s budget for a number of years and have contributed considerably to the growth in the public debt stock. He said that a plan has been formulated to rationalise the public bodies by way of a four-pronged approach, which involves divestment, mergers, closers and restructuring.
Meanwhile, Mr. Shaw said it has been recognised that it is inadequate to focus solely on central Government’s fiscal performance, and as such, a consolidated set of accounts will be presented, to incorporate central Government and the public bodies.
He informed that Cabinet has already given approval for the establishment of a Central Treasury Management System, the objective of which is to maximise efficiencies in execution of treasury management functions.
“While the benefits of these reforms have not been strictly quantified, it is expected that once implemented, there will be positive fiscal impact. The impact should be transmitted in the form of reduced cost to the government and an improvement in the tax system, which would yield positive revenue flows and improved governance, transparency and efficiencies within the Government’s systems,” Mr. Shaw said.