KINGSTON — Recently released data from the Bank of Jamaica (BOJ) showed that the level of net international reserves (NIR) at the end of November 2011, stood at approximately US$1.96 billion.
The figure, though some US$70 million less than the US$2.03 billion in reserves recorded at the end of October, 2011, represents nearly 20 weeks of goods and services imports, based on the estimated value of imports for the 2011/12 financial year.
This compares favorably with the international minimum standard of 12 weeks of goods and services.
Meanwhile, gross reserves, which consist of foreign assets, stood at approximately US$2.9 billion at the end November 2011.
The NIR represents foreign assets less foreign liabilities held by the nation. While the reserves are not credited to the country’s revenues, they provide confidence to the markets that the nation’s external obligations can be met.
In particular, a country’s reserve holdings represent an implicit guarantee that sovereign debt will continue to be serviced even in situations where access to new borrowing may be curtailed or become very costly.
The NIR also represents contingency funds, which can enable the country to survive severe external shocks, cope with shifts in investor confidence, and natural disasters.
By Allan Brooks, JIS Reporter