Mar 2016 Financial News

Byles upbeat on Jamaica meeting year-end fiscal targets

Mar 16, 2016

Co-chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, says that Jamaica would benefit from a follow-up agreement with the International Monetary Fund (IMF), also citing the completion of the current programme as one that is critical to Jamaica’s credibility in the international community.

Giving an overview of the economic performance for the current fiscal year to January 2016 while speaking at Tuesday’s EPOC press conference, Byles also said that the year-end targets under the current IMF programme were within reach.

One of these is the primary surplus target for March which is set at $120.7 billion.

Up to January, the country produced a primary surplus of $69.4 billion compared to the $71 billion budgeted (adjusted for the reduction of 0.25 per cent reduction in the primary surplus target).

With advice from the Ministry of Finance that there had been spending cutbacks in February and with expected corporate tax collections, Byles said that the target should be met.

“If the recurrent over-expenditure has indeed been corrected in February, then we will be in a good position to achieve the vitally important March target of $120.7 billion primary surplus. The country will surpass the NIR target for March 2016.”

In January the NIR stood at US$2.23 billion, in excess of the IMF target of US$1.61 billion for end March, he noted.

A scripted review by EPOC, circulated at the meeting, stated that tax collections continued to outperform “and despite shortfalls in grants and the bauxite levy, total revenues remain within striking distance of the budget”.

With the current IMF programme due to end in March 2017, Byles said that all remaining tests must be passed. And referring to options at the end of the programme he said, “Another IMF programme would be a good thing to ensure we stay the course.”

The programme, he stated, is one which can ensure that Jamaica “remains on a prudent fiscal path”.

EPOC’s review noted that expenditure for the April to January period was $1.6 billion above budget. Of this amount, recurrent expenditure was $2.8 billion above budget, mainly accounted for by the overspend on wages ($3.7 billion) arising from the recent negotiations with the trade unions and programmes.

Revenues and grants for the first 10 months of the fiscal year (April – January) are $970 million or -0.3 per cent behind budget.

Better performers were tax revenues at $3.8 billion or 1.2 per cent above budget.

Tax categories with the best performance were tax on interest ($2.6 billion), company tax ($2.0 billion), SCT ($1.6 billion) and GCT ($1.0 billion) customs duty (-$1.1 billion), tax on dividends (-$0.9 billion) and telephone tax (-$0.6 billion).

The areas that experienced low collections are grants (-$3.2 billion) and the bauxite levy (-$2.0 billion), which contributed to an overall shortfall of $1.0 billion in Revenue and Grants for the 10-month period.

Capital expenditure was $1.2 billion behind budget.

The EPOC co-chair said projected growth of 0.8 per cent for the fiscal year by the Planning Institute of Jamaica was disappointing, but understandable considering Jamaica’s high level of indebtedness.

Byles noted an improved trade deficit and better credit terms as two positive developments for the period under review. Total remittance inflows for the period January to November 2015 also increased by US$63.0 million (3.2 per cent).

Byles concluded that the new administration’s stated focus on growth could hopefully push Jamaica past the one per cent growth hurdle.

The EPOC co-chair disclosed that a meeting with the new Minster of Finance Audley Shaw was amicable, with Shaw expressing a wish for the committee to continue its work in the interest of transparency. The next meeting of EPOC is scheduled for April 8.

 

Source:
BY AVIA COLLINDER
colindera@jamaicaobserver.com
Business reporter 
Wednesday March 16, 2016    

http://www.jamaicaobserver.com/business/Byles-upbeat-on-Jamaica-meeting-year-end-fiscal-targets_54744