Above: Kingston (CJ Photo)

By the Caribbean Journal staff

Jamaica will be receiving an $80 million loan from the Inter-American Development Bank aimed at improving the “effectiveness and efficiency” of the country’s tax system.

The loan will target “fiscal sustainability,” according to the IDB, with the goal of reducing tax distortions, strengthening revenue collection and enhancing the government’s control over budgetary expenditures, among other measures.

“Jamaica faces a significant challenge in terms of achieving economic growth and fiscal sustainability,” the bank said in a statement. “It is important to modernize a tax system that is complex, discretionary and outdated. A more effective tax administration will improve the efficiency and transparency of Jamaica’s public sector institutions.”

The IDB said the government of Jamaica would also lower its wage bill as a percentage of its gross domestic product, “thereby allowing greater investment in activities that promote economic growth.”

The IDB loan has a maturity of 20 years, with a 5.5-year grace period and an interest rate based on LIBOR.

“These tax reforms will reduce the fiscal drain and contingent liabilities by rationalizing their structure and improve accounting practices,” the IDB said.