IMF Concludes 2016 Article IV Consultation with Jamaica
Since May 2013, Jamaica’s implementation of the economic reform program supported by the EFF has been exceptional by international standards. After three years of difficult economic reforms, inflation is at historical lows, the current account deficit has more than halved, net international reserves have doubled, and access to domestic and international financial markets has been restored, supported by upgrades in credit ratings and historically high business confidence indicators. Comprehensive reforms in tax policy and administration have been and continue to be undertaken, while strict adherence to fiscal discipline together with a PetroCaribe debt buyback have helped place debt on a downward trajectory. Financial sector resilience has been strengthened and supply-side growth constraints have been eased. Elections in February 2016 resulted in a change in government. The new government remains committed to continuing reforms under the program, with a focus on maintaining fiscal discipline while achieving equitable growth through increased capital spending and the strengthening of the social safety net.
Executive Directors commended the authorities’ strong implementation of their Fund-supported program since its inception. Macroeconomic stability has been restored, marked by historic low inflation, halving of the current account deficit, reduction of public debt, and regained access to international and domestic bond markets. Nonetheless, growth and employment have remained weak, and Directors underscored the need to accelerate efforts to address deep-rooted structural impediments to strong private-sector led growth. In this regard, they welcomed the new administration’s commitment to the reform objectives.Directors welcomed the progress in enhancing financial sector resilience. They concurred that the financial sector should be strengthened through further retail repo reforms and enhanced financial sector supervision and crisis management, including establishing a legal framework for the resolution of banks and securities dealers. Directors also highlighted the importance of promoting further development of the domestic debt market. They welcomed the Fund’s commitment to better understand and address the issues related to the loss of correspondent banking relationships, and urged the authorities to work with the Fund and other partners in this area, in tandem with efforts to strengthen the AML/CFT framework.
Directors stressed that continued structural reforms are needed to boost growth and employment. They highlighted, in particular, the need to reduce energy costs, increase access to finance, enhance public sector efficiency, expedite labor market reforms, and continue to improve the overall business environment to attract private investment. Proper communication will be important to secure continued support by the population for the reform efforts.