Caribbean policymakers should weigh carefully the costs and benefits of tax exemptions, consider reducing them if possible, make remaining tax incentives cost effective and step up efforts to improve other determinants of investment.
This is according to the International Monetary Fund (IMF) in a Public Information Notice (PIN) on Caribbean countries on Friday. The PIN was prepared by the IMF’s External Relations Department and the country authorities sourced for the study included The Bahamas, Barbados, Belize, The Dominican Republic, Guyana, Haiti, Jamaica, Trinidad and Tobago and Suriname.
Directors of the IMF noted that while the Caribbean countries’ heavy reliance on tax incentives may help attract investors, they are costly in terms of foregone revenues. “Directors observed that other efforts to attract investment may be more effective for the region as a whole, and pointed in this connection to factors such as institutional quality, infrastructure and governance, as important determinants of FDI (Foreign Direct Investment),” the IMF said.
It added that overall macroeconomic performance in the Caribbean has been favourable in recent years and that regional economic growth which had fallen after the September 11, 2001 attacks has rebounded strongly, expanding by 5
