It was a special Cabinet meeting with one item on the agenda should the government agree to a Standby Arrangement with the IMF? Well the session lasted nearly 6 hours, but 7NEWS is reliably informed that Cabinet has decided that government will not enter a Standby Arrangement with the IMF. But that doesn't mean that there aren't tough times ahead. Best reports indicate that government will pursue what we understand will be called a home grown remedy, which we take to mean the IMF plan of cost cutting and tax raising with a pinch of local sugar to make it go down just a little bit easier. Mainly, reports to us suggest that government will await the result of a broad based tax review being led by Minister Jose Coye to implement tax changes.
Indications are that those tax changes will lead to a consumer tax with a broader base. Government is also looking very closely at its $230 million wage bill and is examining options for downsizing in the areas of contract officers and open vote workers. Of course, the worry with any homegrown plan is that the country's money managers have a less than stellar record of managing it to meet targets. Case in point, in his rebalancing budget the Finance Minister Ralph Fonseca predicted an overall deficit that was 1.6% of GDP and that came out to 8% and in the successive year, the Prime Minister predicted an overall deficit that would be 4.7% of GDP and that came out to 9.2%. Not exactly encouraging, but tomorrow government will dispatch three ministers to a Cabinet briefing where the wisdom and virtue of the homegrown plan will be explained to the media.
