IMF Staff Concludes Review Mission to Jamaica
At the conclusion of the mission IMF Mission Chief Ms. Ramakrishnan issued the following statement in Kingston:
“The mission reached preliminary agreement with the authorities on a package of policies that aims at completing the ninth review under the EFF. Consideration by the IMF’s Executive Board is tentatively scheduled for September 2015. Upon approval, SDR 28.32 million (about US$40 million) would be made available to Jamaica.
“A gradual economic recovery is underway. The growth outlook is improving, although the drought is hampering agricultural recovery for the second year in a row. Growth is now projected at 1.4 percent in 2015-16. The unemployment rate declined to 13.2 percent in April, with strong employment growth in tourism and in the business process outsourcing (BPO) sector. Inflation remained at a historic low of 4 percent in July, in spite of higher food prices on account of the drought. International reserves have continued to increase, standing at US$2.4 billion at end-July.
“Program implementation remains strong. All quantitative performance targets through end-June were met, with tax revenues exceeding expectations. Structural reforms are also broadly on track.
“The recent PetroCaribe liability management operation is an important step in reducing Jamaica’s public debt. The buyback has immediately reduced the debt-to-GDP ratio by about 10 percent of GDP, and the Net Present Value (NPV) gain of the transaction is estimated at about US$300 million. This proactive operation will help keep public debt on a clear downward trajectory, with debt-to-GDP now projected at 125 percent by the end of this fiscal year.
“We welcome the recent wage agreement between the Government of Jamaica and the Jamaica Confederation of Trade Unions (JCTU). Improving the efficiency, quality and cost effectiveness of the public sector is critical for higher growth. Lowering the wage-to-GDP ratio to the 9 percent target for 2016/17 will create fiscal space for capital spending, which will help the government invest in long-term priorities.
“Continued strong implementation of the government’s growth strategy is essential to support job creation and boost the economy. We welcome the steps taken by the Electricity Sector Enterprise Team to lock in lower electricity prices by diversifying sources of energy used for electricity generation beyond oil. There is also scope for further improvements in the business climate. Enhancing access to credit for small and medium-sized enterprises will improve financial inclusion and support private investment.
“Financial sector stability is being strengthened through progress in implementing the Banking Services Act and ongoing reforms in the securities dealers sector. The transition of retail repos to a trust is nearing completion and should make this investment more secure and transparent.
“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.”