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Government will have to impose new taxes upon signing of the IMF agreement as a part of the measures to contain expenditure and increase revenue.
Speaking on a radio and television discussion programme yesterday (Dec 13) Prime Minister the Hon. Bruce Golding said the new taxes will have to be imposed almost immediately.
“Up to the end of October our revenues were running $17.8billion below projections. We have tried to contain our expenditure. We have actually tightened expenditure to the point where our expenditure is running $7billion behind projections… but you will no longer have the facility to go to the market to say lend me an extra $10billion. We are going to have to close the gap in this fiscal year… So more taxes will have to come”, he said.
Mr. Golding explained that central to the IMF programme are performance targets that have to be met which is why the negotiations are taking so much time. These performance targets, he said must include getting the deficit down over the medium term. “We are going to have to align our expenditure with our revenue. In the first year it is going to be significant but it is going to be continued over the medium term with some expectation that you will see a return to Gross Domestic Product (GDP) growth so that some of the adjustments that would normally be necessary at that stage will be covered by growth”.
He said this would require the imposition of new taxes that can be collected almost immediately upon signing of the IMF agreement.
Mr. Golding said central to the programme is the intention to bring down interest rates, which would involve looking at the profile of our debt. He said Jamaica is paying the highest interest in the world with interest rates of up to 24%. He said Jamaica’s focus is not just how to endure the recession but was also about how to get the country on a path to recovery.
The Prime Minister said the vision for the transformation of the economy is not the role of the IMF. “It is our job, as the IMF only comes in to provide you with assistance particularly in a time of crisis. Part of our problem is that the economy has not for many decades diversified itself to identify new spheres of growth that can have the multiplier effect to embrace other sectors of the economy”. He said the country must now move beyond the heavy dependence on bauxite and tourism.
Some of the areas that Government would be looking at in order to move the country forward will include securing new investments , the development of the creative industries, expanding agriculture through agro-processing and stimulating small and medium sized enterprises to provide new jobs, products and services.
Despite the challenges that face the country with the conditions that will accompany the IMF agreement, Mr. Golding said the government will have to find creative ways of ensuring that new programmes can be implemented and cited as examples public private sector partnerships.

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