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Jamaica Looks To Lock In Fiscal Improvement

by Mike Godfrey,, Washington

15 April 2014

Jamaica is to introduce law changes to ensure that the territory retains fiscally prudent policies, and in the short-term continues to reduce the national debt.

The new rules are being urged by the International Monetary Fund (IMF) to prevent Jamaica from spending more than its economic output (except in certain extraordinary circumstances, such in the event of a natural disaster).

The Jamaican Government has confirmed that it agreed to the IMF terms in a Letter of Intent (LoI) signed in December last year. It agreed a package of measures to encourage economic growth and diversification, and reduce the public debt from 140 per cent of gross domestic product (GDP) to 60 per cent by 2026.

Jamaica's Minister of Finance and Planning, Peter Phillips, said: "The international community, the financial markets, the multilateral agencies, private and official leaders are not convinced that we, collectively, have the fiscal discipline to prevent the future run-up of our debt. We need to prove them wrong."

Financial analyst Ralston Hyman, speaking on the Jamaican current affairs program 'Issues and Answers', stated that Jamaica's new fiscal rules will stabilize the economy and encourage investor confidence. Hyman also stressed the importance of embracing fiscal responsibility stating that: "For 45 of our 51 years of independence we have been running fiscal deficits so there is no culture of fiscal discipline in Jamaica."

The new regulations cover debt, the budget, expenditure and revenue, and will be tabled this fiscal year, 2014/15.

TAGS: Finance | tax | law | budget | International Monetary Fund (IMF) | Jamaica | regulation

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