More debt swaps are on the horizon

As the government moves to implement actions agreed to between itself and the IMF it should be noted that the PNP government have agreed to consider more debt swaps between now and 2014. This would therefore mean that Jamaicans would be called upon to bear even more burden in terms of reduced income on their investments.

This is what has been noted in the recently signed agreement

• 26. The authorities have identified options for debt swaps and reduced domestic debt guarantees that are expected to be implemented during the first program year, to reduce public debt by about 2 percent of GDP (MEFP ¶26).The combination of asset sales and debt-asset swaps based on land and buildings should amount to close to 1 percent of GDP. The government expects to complete a preliminary valuation of these assets by end-June 2013, and complete an action plan by September 2013 for implementing the operations. The withdrawal of guarantees JAMAICA16 INTERNATIONAL MONETARY FUND issued to underwrite private domestic loans to public entities would also be equivalent to 1 percent of GDP.

• 27. To deliver the program’s debt target of 96 percent of GDP by end-March 2020, further steps to reduce public debt will be incorporated as part of the program, if necessary. In particular, the authorities have committed to review the medium-term debt outlook by May 2014 and identify what further measures might be needed to achieve the above debt target (MEFP ¶27),. These could include further asset sales or swaps and or other debt reduction measures. The latter could potentially include exceptional assistance committed by bilateral and multilateral development partners and, in this context, the authorities have approached the Paris Club to explore options for debt relief. Any additional debt reduction measures would be implemented by end February 2015.

Folks I would encourage you all to take the time out and read the IMF agreement.  Every move the goverment is making is dancing to the beat of the IMF and its all contained in the document for those who choose to take the time out to read it.

 

The new REVENUE ACT which was passed about 11pm last night was item #17 in the document and its states the following:

The authorities agreed to urgent steps to strengthen revenue administration (MEFP ¶33). Compliance management continues to be weak in both tax and customs administration, particularly in the areas of taxpayer registration, filing and payments, and collection enforcement.
Immediate steps to improve revenue administration include filling key management positions at the Tax Administration Jamaica (TAJ). The government has prioritized upfront reforms to strengthen revenue administration including: (i) amending legislation to provide tax officials access to third-party information; (ii) increasing the resources of the Large Taxpayer Office; (iii) implementing a debt write-off policy for tax and customs duties arrears; (iv) publishing the names of delinquent taxpayers; and (v) approving the Tax Administration Jamaica (TAJ) as a semi-autonomous revenue agency. The first two reforms are structural benchmarks under the program, while the latter three reforms were intended in the staff-level discussions to be proposed as structural benchmarks, and were already implemented in March 2013.

 

Its June so Item #26 in bold above should be the next move by the government.

As time moves along I will keep the blog focus by taking out specific sections contained in the agreement so we can all be kept aware of the government’s next move.