State Minister Says Jamaica Faces Stable Future

State Minister for Finance and the Public Service, Hon. Fayval Williams, says Jamaica faces a more stable future based on notable macroeconomic gains, particularly under the four-year Extended Fund Facility (EFF).

Mrs. Williams notes that debt is declining, the Net International Reserves are strong, and the rate of inflation is at “historic lows”, as a result of lower global oil prices and higher consumer and business confidence.

Additionally, the State Minister said the International Monetary Fund (IMF) has concluded that the Jamaican dollar is now “fairly valued”, based on its latest assessment.

The State Minister was speaking at a public forum hosted by the Hugh Lawson Shearer Trade Union Education Institute at the University of the West Indies, Mona Campus, in St. Andrew, on October 20.

Mrs. Williams said the positive gains recorded have positioned Jamaica to secure a 36-month precautionary standby agreement, subject to the approval of the IMF’s Executive Board at its meeting in November.

Noting that the proposed programme was shorter, the State Minister said it will provide a larger amount of financing, US$1.7 billion, as against the US$932.3 billion which was provided under the EFF.

She said that while the EFF required the implementation of a new tax package and several prior actions, including a National Debt Exchange, public-sector wage restraints, and curtailment in the granting of discretionary waivers, the Government’s focus and goals under the new agreement are different.

These include reorienting public resource allocation towards infrastructure, social protection and security-related expenditure, while transforming the public sector to be more efficient and delivery-focused; modernising the monetary policy framework to build the foundation for an eventual move to inflation targeting; bolstering the financial sector’s resilience; and working with the

Economic Growth Council to implement initiatives aimed at unlocking Jamaica’s growth potential and generating jobs, particularly within the private sector.

Mrs. Williams emphasised, however, that there were several engagements under the EFF, which would continue under the pending agreement.

These, she outlined, include maintaining a seven per cent primary surplus balance in the budget, which amounts to $123 billion for the 2016/17 fiscal year.

“The good news is that from April to September, the primary surplus was almost $52 billion, so we are about halfway there. This is running ahead of budget and ahead of where we were for the same period last year,” the State Minister informed.

Additionally, Mrs. Williams said Jamaica is still required to reduce the debt to gross domestic product (GDP) ratio to 60 per cent or less, by the 2025/26 fiscal year.

This figure, she pointed out, is expected to decline to 96 per cent by the end of the current year in March 2017.

“We also have to get to that nine per cent wage-to-GDP figure, by 2018/19. The good news is, we are expected to end this fiscal year at about 9.6 per cent,” the State Minister pointed out.

The forum, which was held under the theme ‘Public Sector Workers: Expectations Beyond March 2017’, focused on the implications for Jamaica, particularly civil servants, consequent on the implementation of a successor IMF economic programme.