KINGSTON, Jamaica (CMC) – Chairman of the Economic Programme Oversight Committee (EPOC), Richard Byles, says Jamaica is on track to pass the two performance assessments being conducted by the review team from the International Monetary Fund (IMF) under the multi-million dollar extended fund facility (EFF).

In 2013, Jamaica entered into a four year US$948.1 million EFF agreement with the IMF and so far the island has successfully completed 10 reviews over the past three years. The remaining three reviews will take place by the end of the year.

Byles said Jamaica has comfortably met the IMF targets for the Net International Reserves (NIR) and the primary balance.

Jamaica recorded NIR of US$2,426.7 million as at March, while exceeding the primary balance to end at $120.8 billion. Recently, the IMF lowered the primary surplus target by 0.25 per cent, requiring Jamaica to maintain a target of 7.0 per cent.

Byles said that Jamaica must not only meet the fiscal and monetary targets but a number of tax reform programmes slated to take effect during the fiscal year in passing the reaming three IMF tests.

He said in addition to these quantitative targets, major tax reform, central government pension reform, public sector transformation, and the labour reform are all expected to be continued.

“A number of important structural reforms need to happen in this fiscal year, so serious tax reforms are going to begin shortly.

“Four fairly deep and important pieces of reform that need to be all completed in this fiscal year. So although the number of roughly J$121 billion (One Jamaica dollar =US$0.008 cents) looks achievable, those reforms also have to be achieved to pass the remaining IMF tests,” Byles said.

Byles says the government’s income tax plan outlined in Parliament last week, will create a fiscal gap of $25 billion in financial year 2017/18 and that the country could face more belt tightening measures.

He told reporters that he had concerns about funding the fiscal gap from the implementation of a J$500,000 increase in tax threshold next April, in addition to the National Housing Trust drawdown of J$11 billion annually to fund budget expenditure in meeting the primary surplus which will come to an end next March.

The increase in income tax is expected to cost the country nearly $14 billion.

“That agreement which comes to an end next March has to be reviewed. What is involved in that I’m not sure; it’s something that we could look at for further discussion. But it’s either a review of the agreement or we have to find some other way to plug that gap of the 11 billion plus the 14 billion from the tax threshold increase,” he said, adding “so we are looking at a potential 25 billion challenge in the 2017/2018 fiscal year.

“Why am I talking about it now? It’s a big number and we have to start thinking about it and craft the way in which we are going to deal it. Although it falls outside of the IMF programme, which terminates in March of next year, nonetheless it is a challenge that will be there and we will have to meet it,” Byles said.