Jamaica Receives USD100m World Bank Loan To Improve Tax System

by Amanda Banks, Tax-News.com, London

27 January 2009

Jamaican Finance Minister Audley Shaw and Director of the World Bank’s Caribbean Management Unit Yvonne Tsikata signed a USD100m (JMD8.49bn) Development Policy Loan on January 23; the money will be used to improve Jamaica’s tax system.

The Jamaican government announced last weekend that the programme is aimed at containing and reducing debt, enhancing revenues, and increasing the efficiency of public sector spending and investment.

Speaking at the signing, Shaw said the loan represents the World Bank's single largest disbursement to Jamaica, and brings the amount of funding received from the multilateral agency over the last four years to USD217m.

The loan, which, he pointed out, is being made available at an interest rate of 1.8%, is to be repaid over 30 years, with a five-year moratorium period on the repayment of the principal.

The Finance Minister said the administration is committed to realising a number of policy-based initiatives, thereby securing important and significant outcomes. These include: reducing the net public debt to Gross Domestic Product (GDP) ratio; increasing the efficiency of public financial management and budgeting processes; improving the capacity at the Auditor General's Department, through staff training and improved facilities; reducing distortions and enhancing the efficiency and fairness of the tax system; and widening the tax net.

In her remarks, Tsikata said the loan facility, which comes in response to the government's request for assistance, and is the first of a series of measures which are to be supported by the World Bank and other development partners to help Jamaica deal with its debt, expressed the hope of continued "collaboration with the government and people of Jamaica."

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