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A gradual economic recovery is underway for Jamaica says IMF

KINGSTON, Jamaica – An International Monetary Fund (IMF) mission led by Uma Ramakrishnan visited Jamaica from November 4-13, 2015, to conduct discussions on the tenth review of Jamaica’s IMF-supported program under the Extended Fund Facility (EFF).

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 tenth review under the EFF. Consideration by the IMF’s Executive Board is tentatively scheduled for December 2015. Upon approval, SDR 28.32 million (about US$39 million) would be made available to Jamaica.

“A gradual economic recovery is underway, with growth projected at about 1.5 percent in FY2015/16, and 2.5 percent for the next fiscal year. The unemployment rate declined to 13.1 percent in July and employment gains are being generated in the tourism and business process outsourcing sectors. Inflation fell to a historic low of 1.8 percent in September, thanks to lower oil prices and the receding after-effects of the drought. Gross international reserves were US$2.9 billion at end-October (5 months of imports of goods and services).

“Program implementation remains strong. All quantitative performance targets through end-September were met and the authorities’ plan for structural reforms is also on track. The authorities and the mission agreed that the focus now should be to ensure Jamaica moves quickly to a position of strong, sustained, and dynamic economic growth and job creation.

“With macroeconomic stability now well entrenched, and the debt dynamics improving, the authorities and mission agreed that a loosening of fiscal policy and a realignment of monetary policies were both warranted to better support the real economy. To this end, a staff level agreement was reached to lower the target for the primary surplus to 7.25 percent of GDP for this fiscal year and to 7 percent of GDP for FY2016/17. This additional fiscal space will provide an opportunity to increase public spending on capital outlays that boost growth and job creation as well as to continue to protect social spending. Further, a more expansionary monetary stance will help complement this fiscal expansion by supporting credit expansion and private-sector activity. Continued strong program implementation will remain important to achieve fiscal and debt sustainability.

“Financial sector stability reforms, an important program component, have advanced significantly: the Banking Services Act is now in effect, retail repos have transitioned to a new Trust-based framework, and the Bank of Jamaica has been given a broad mandate for financial stability.

Dr. Peter Phillips
Dr. Peter Phillips

“Progress continues to be made in improving Jamaica’s business climate, as evidenced by the World Bank’s Doing Business 2016 rankings, which lists Jamaica among the top 10 most improved economies worldwide. There is, however, more to do particularly by making it easier to comply with the tax code, facilitating cross-border trade, and increasing the availability and lowering the cost of electricity.

“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.”



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