IMF concludes review mission to Jamaica
An International Monetary Fund (IMF) mission led by Jan Kees Martijn visited Jamaica during November 5−14, 2014, to conduct discussions on the sixth review of Jamaica’s IMF-supported program under the Extended Fund Facility (EFF).
At the conclusion of the mission, Martijn issued the following statement in Kingston:
“Jamaica’s economic transformation program offers a path to vibrant, sustained growth and job creation. The government’s program is appropriately centered on wide-ranging supply side reforms and a rapid reduction in public debt to support private sector growth. Multi-year fiscal consolidation based on a clear anchor — the primary surplus target — is integral to this effort.
“The program is on track and policy implementation remains strong. All program targets through end-September were met. The Fund mission reached preliminary understandings with the authorities on economic policies that will support growth and employment in the months and years ahead.
“The economic outlook is improving. Activity is estimated to have expanded by about 1.8 percent year-on-year during April-June 2014. The recent drought is expected to have undercut growth in the July-September quarter, but the economy will pick up steadily, with growth projected at 2 percent in 2015/16. Inflation is likely to remain around 8 percent this year. Unemployment decreased to 13.8 percent in July 2014 from 15.4 percent a year earlier.
“Over the course of the past few years, fiscal and external vulnerabilities have been put on a downward path. Under the government’s policy program, the current account has strengthened, and net international reserves increased to US$2 billion by end-October (with gross reserves at US$2.5 billion). The authorities remain on track to achieve for the second year in a row an impressive 7.5 percent of GDP central government primary surplus.
“The critical challenge ahead will be to sustain the reform momentum and the strong fiscal position, with the understanding that it takes time for the efforts and sacrifices to generate the expected benefits. Wide-ranging efforts will be needed to:
• Improve the business climate. Progress has been made and Jamaica has been improving in the World Bank’s Doing Business ratings. Legislation has put in place a new insolvency law and flexible work arrangements, while a new system now in place allows all parishes to track the approval of construction permits. Work is still required, though, to streamline the process for construction permits, create a more business friendly public sector by reducing bureaucracy, and to make the energy sector more efficient;
• Strengthen social protection by supporting people aiming to move from welfare to work, and maintaining social spending above the program floor;
• Maintain the primary surplus of the central government at 7.5 percent of GDP in 2015/16 by building a stronger tax administration and restraining the wage bill through a public sector transformation that raises government efficiency;
• Reinforce the legal and regulatory framework for the financial sector, by putting the securities dealers sector on a more sound footing and implementing the newly adopted Banking Services Act.
“The IMF’s Executive Board is expected to consider the sixth review of Jamaica’s IMF-supported program under the EFF in December. Upon approval, SDR 45.95 million (about US$68 million) would be made available to Jamaica.
“The mission met with the Minister of Finance and Planning, Dr. the Hon. Peter Phillips, Bank of Jamaica Governor Brian Wynter, Financial Secretary Devon Rowe, senior government officials, as well as representatives of the private sector and civil society. The mission would like to thank the authorities and technical staff for their cooperation and hospitality.”