Reforms to reduce transportation and energy costs were also among recommendations made by the IMF
Less than two weeks after Government of Saint Lucia presented a proposal to cut wages and salaries by 5%, the IMF has made a case to reduce the wage bill and the amount spent on transfers and subsidies in the region.
Following the conclusion of the 2014 discussion on the common policies of the countries of the Eastern Caribbean Currency Union (ECCU), the IMF has released a statement on the Executive Board Assessment and highlighted the need for an "ambitious, credible medium term fiscal consolidation to put public debt on a sustainable path and create the fiscal space for counter cyclical policies".
In a Press Release dated June 19, 2014, the IMF stated,
“Directors recommended a two pronged approach to reducing fiscal imbalances. On the expenditure side, they saw scope to reduce the wage bill and budget transfers to state owned enterprises, while better prioritizing public investment and consolidating government functions through broader regional collaboration. On the revenue side, a coordinated regional strategy is needed to streamline tax incentives, reduce intra regional tax competition, and enhance transparency in tax systems. Directors underscored the need for prudent management of citizenship by investment programs, backed by strong due diligence and a transparent operational framework."
According to the IMF, these measures are essential if the ECCU is to avoid further deterioration of its financial position. Further, the IMF called for strengthened collaboration among the governments of the ECCU, to help "ease the region’s capacity constraints and improve economies of scale".
Reforms to reduce transportation and energy costs were also among recommendations made by the IMF.