BoJ Gov Says Inflation Targets Achievable

KINGSTON — Governor of the Bank of Jamaica (BoJ), Bryan Wynter, says that despite rising world commodity prices, Jamaica's monetary authorities were able to reduce inflation from 13.3 per cent in 2009 to 7.8 per cent last year, a  5.5 percentage points reduction. 

He also noted that the 7.8 percent headline inflation for the past fiscal year, was close to the bottom of the target range of 7.5 per cent to 9.5 per cent

The central bank governor was speaking at a breakfast forum hosted by the Montego Bay Chamber of Commerce and Industry, at Secrets Resorts and Spa, Montego Bay on Thursday April 21.

“STATIN released its inflation report for March, which saw consumer prices increasing by 1.1 per cent for the month. This matched the central bank’s projection exactly, and reflected the impact of increased oil prices on electricity and transportation-related costs, as well as the announced increase in minimum wages,” he observed.

Mr. Wynter stated that the achievement was particularly noteworthy in the context of this year’s steep increases in commodities prices, and with oil prices rising by 18 per cent and corn by 31 per cent.                      

He said that this was worth stressing, so that the country could appreciate that the success of the policies in reducing inflation to 7.8 per cent last year, was achieved in an environment of sharply higher world commodity prices.

He admitted that the success in bringing down inflation occurred in a weaker economy than had originally been projected. But, he attributed this to adverse local and international weather conditions, including Tropical Storm Nicole and ash clouds in Europe, as well as the temporary fall-out the economy experienced, particularly in the tourism sector, from the disturbances in West Kingston last May. 

He pointed to a number of growth sectors and other positive developments, which occurred, despite the many challenges, with the tourism sector remaining the bright star. He noted that stopover tourist arrivals for the full fiscal year are estimated to have grown in the region of 3.5 per cent to 4.0 per cent. Cruise passenger arrivals, of which about a third comes through Montego Bay, recorded growth of approximately five per cent, following three successive years of decline.

“The industry is now poised to grow substantially in the coming year, because of the opening of the new port in Falmouth,” he predicted.

With respect to the balance of payments, Mr. Wynter highlighted the strength of the Net International Reserves (NIR) which, at the end of the year, was a healthy US$2.5 billion, up US$800 million for the year.

He also maintained that the performance of the gross reserves was equally impressive.

“Gross reserves ended at US$3.4 billion, representing nearly 23 weeks of projected imports of goods and services. This performance was underpinned by heightened confidence about the prospects for the economy, as the Government demonstrated repeated successes in meeting the quantitative targets under the agreement with the IMF,” he stated.

Mr. Wynter’s address took place just one week before Minister of Finance and the Public Service, the Hon Audley Shaw, presents his plans to finance the Government’s expenditures for fiscal year 2011/12, when he opens the Budget Debate next Thursday in the House of Representatives.

The Governor suggested that, in addition to the obvious interest in the outcome of the debate, Jamaicans should take special note of the focus on reforming the entire budget process, which represents a major step in a series of policy initiatives aimed at reversing the trends in Jamaica’s indebtedness, entrenching fiscal discipline and accountability and engineering sustainable GDP growth.   

By ALLAN BROOKS, Senior PR Account Executive