The Government continues to hold discussions with our multilateral partners regarding the actions necessary to consolidate the gains made in fiscal management and ensure the success of Jamaica’s economic programme as embodied in the Standby Arrangement with the IMF.
While the performance for this fiscal year is broadly on track, there are challenges that must be addressed in order to achieve our medium term targets through to 2015/2016. Principal among these is the provision that must be made for payment of the 7% increase granted to public sector workers inclusive of the arrears covering the period 2009 – 2011. Provision also has to be made for legacy payments resulting from arbitration or judicial awards relating to Cricket World Cup, the construction of the North Coast Highway and the revocation of the JUTC bus franchise.
Fulfilment of our programme commitments also requires agreement with public sector unions to ensure that future wage adjustments do not breach the annual targets designed to reduce the wage-to-GDP ratio to 9% by 2015/16. This is the subject of intense discussions between the Government and the public sector unions through the Public Sector Monitoring Committee.
Certain policy initiatives are also crucial to the success of the programme. These include tax reform aimed at widening the tax base and eliminating anomalies in the tax system. Consultations with key stakeholders are well advanced and the deliberations of the Special Select Committee of Parliament are expected to be concluded in time to allow for implementation commencing January, 2012.
An essential component of the tax reform programme is the reduction of discretionary waivers which deprive the government of revenue vitally needed to contain and eliminate the fiscal deficit.
Another significant requirement of the programme is the completion of the divestment of Government’s shares in Clarendon Alumina Production. In this regard, negotiations are in their final stage and the negotiating team is expected to return to the island this weekend with a draft agreement.
The Government recognizes the need for strong and urgent action to ensure the fulfilment of our obligations under the Standby Agreement including the adjustments that are required as a result of unplanned expenditure. In the absence of the Minister of Finance who had to rush his infant daughter for specialist treatment abroad, I held discussions yesterday with the technical officers and, based on the directions given, they are to report back to me, Minister Shaw and Minister Holness on Monday (Oct 10).
In the meanwhile, it is to be noted that the process of economic recovery is continuing as evidenced by data released by STATIN yesterday (Oct 6) which shows that the economy grew by 2.1% in the second quarter of this year which is above the Government’s projection of 1.5%.