But, the report isn't an investment brochure. It does warn about an increase in non performing loans in the banking sector and states quote, "banks more exposed to the sectors most affected by the pandemic have experienced larger increases in NPLs."
And, as they always do, the IMF wants the government to take some basic food items out of the zero rated basket and subject them to GST. They also suggest raising fees on vehicle registrations and driver licenses, and increasing excises on fuel.
And, the IMF also urges the government to move toward pension reform for the public service. They say the Pension Plan for Public Officiers is, quote, "a non-contributory defined-benefits pension system with a low retirement age and high benefits." They advise, quote, "Gradually increasing the contribution rate to 10 percent, raising the retirement age from 55 to 65…The sooner these reforms are implemented, the more gradual and less disruptive they can be." End quote.
And the IMF met with the joint unions to give them this proposal? How did it go? We challenged the PSU president about it when he appeared on Uncut:
Jules Vasquez
"95.8 million for pensions. That is too much. That's a hundred million dollars, that was in 2020. That's a hundred million dollars - 8% of the budget overall is being spent on pensions. Union leaders, how can we continue to have a non-contributory pension? It makes no sense. 100 million dollars. The IMF already explained to you all its too much."
Dean Flowers, President, PSU
"Yeah, a hundred million. Have you ever seen an audit report from the auditor general that substantiate that number?"
Jules Vasquez
"I have not. The Prime Minister would not make that up, sir."
Dean Flowers, President, PSU
"Have you ever heard of the auditor general, this one or past one, did an audit on the pension scheme, in terms of what its really costing us?"
"That has never happen."
Jules Vasquez
"Is this the number the IMF gave you all though?"
Dean Flowers, President, PSU
"Yes, and you know I will ask the question; where did you get those numbers from? Well, this is what the ministry of finance gave us. Did you substantiate those numbers? Did you get the raw data to.... No, we just go with what the SIB and the financial secretary does."
"So, we agree, let's do it. Let's have the conversation and let's come up with a plan. We are not fighting there, but the prescription has to be well thought out and it has to ensure that if you will take from here, you have to give me here, so we maintain a balance and after we understand that, then I think we'll be better able to come up with a formula that speaks to this. The IMF is also telling you that not only do I want you to effect pension reform, but I want you to extend the retirement age to 65. Now, as we discuss, the payscale does not accommodate that, because the payscale is design for 55."
"So, its wishful thinking if we think we could fix this thing overnight."
Jules Vasquez
"Will you all accept in principle that a non-contributory pension is unsustainable in the long term?""
Dean Flowers, President, PSU
"No. I don't accept it at face value. Why? I said to the IMF, remove zero rated items. That was one of the recommendations. Oh, the zero-rated list is too big and broaden the tax base. And I said to the guy from Chile, what's your recommendation for revenue enhancement? What's your recommendation to address the fleecing private sector? who keeps getting and getting and not paying their fair share. Ahm, well, we're looking at..."
"You come and talk to me about expenditure and you didn't bring absolutely nothing on the revenue side?"
The report also urges government to expand expenditure on infrastructure, targeted social programs such as the BOOST program, and crime prevention.
