Shaw Signs US$198m In IDB Loans Later This Week

Minister of Finance and Planning, Hon Audley Shaw, will later this week sign two loans, totaling US$ 198 million, with the Inter-American Development Bank (IDB), to improve the Kingston Metropolitan Area’s water supply, as well as to assist in the modernization of the fiscal administration to improve customs and tax revenue collections.

The loans, which have an interest rate of 1.3 percent, are part of a three-loan package agreed between the Government and the IDB in mid-November, for US$218 million or J$19 billion, covering water, revenue collection and energy conservation and efficiency. The US$20 million energy loan was signed in late November.

The other two loans comprises US$133 million to improve the efficiency, quality and sustainability of  the Corporate Area’s potable water services, and US$65 million for strengthening the Ministry of Finance and Planning’s institutional capacity, as well as taxpayers compliance and revenue yields, through more efficient administration and collection procedures.

Mr. Shaw who was speaking at a Kiwanis Club of Kingston weekly meeting on Tuesday (December 6), at the Wyndham Hotel, New Kingston, pointed out that there are far-reaching structural reforms that the country has to undertake under its agreement with the International Monetary Fund (IMF).

He said these reforms include a fiscal responsibility framework that has never before seen in Jamaica, and a fiscal agenda which allows for a high level of transparency, coupled with the Government’s commitment to transparency.

“We have passed into law fiscal responsibility framework legislation, with appropriate corresponding regulations, to ensure that we lift the level of transparency in governance,” the Minister told the Kiwanians.

He noted that the parliamentary committee currently reviewing the recommendations of the Tax Reform Green Paper has had some 18 meetings, and has three more to go and a response paper from the Private Sector Organization of Jamaica (PSOJ) to complete its deliberations.

He also expressed his desire to see the reform take pace after the General Election, “as it is a move that the economy must make”. 

“Tax reform is not about changing a policy; it has to be done within a framework of respect for paying taxes. We have got to change our culture in Jamaica of persistent propensity to avoid and evade taxes,” the Minister said.

He reaffirmed that no major difference exists between the International Monetary Fund (IMF) and the Government.

“The only issue has been the pace of the adjustments being made, in respect of the critical reforms. As a nation state, in a democratic system, your Prime Minister, your Minister of Finance, your Cabinet of Jamaica, we are the ones who will have to make sure that we deliberate carefully, so that when we make decisions, we build consensus, and we create understanding,” Mr. Shaw said.

“What would we do if we put in a new system without proper calibration, and then your revenues fall through the ground? What happens then, how do we pay our workers and how do we provide critical services in the economy?” He asked.

“So we have sought to explain to the IMF, that we are in the process, and although the reviews have been delayed by the IMF, the Government has not gone on any fiscal excursions because an election is around the corner. At the end of the day, fiscal responsibility has got to remain firm and intact,” he stated.

On the issue of pension reform in the public sector, the Minister said the new system will come into effect, because the question “is not if we will go to a contributory scheme, it is when we go to a contributory scheme”.

“Members of Parliament are already in a contributory scheme, we are simply saying to all public sector workers that one will need to contribute to a contributory scheme, in order for us to be able to afford pensions, going forward,” he concluded