JIS News

Minister of Finance and Planning, Dr. Hon. Omar Davies, has said that although there were challenges in meeting the fiscal target, “we are still within the projections for this point of the year”.
Dr. Davies, who was addressing a press briefing at his National Heroes Circle offices this morning (Oct. 18) to review the performance of the real economy for the first half of the fiscal year, noted that “the deficit remains our major challenge, both in terms of reducing the debt ratios and also moving us to the point where we will first have a balance budget and then return to the issue of the surplus”.
He added that, “we are seeking to keep the expenditure not just in line with the budget, but consistent with the revenue inflows”.
According to data issued by the Ministry, the fiscal deficit of $16.9 billion was 25 per cent better than projected, while the primary surplus of $23.7 billion was 32.8 per cent above budget. Meanwhile, expenditure was $6.3 billion, or 6.1 per cent less than budgeted.
Turning to inflation, Dr. Davies cited the decline in the inflation rate as being one of the major achievements for the year, noting that there had been a significant reduction since January, with the rate steadily declining from 13 per cent to 6.5 per cent at the end of September. “Barring any unforeseen circumstances, we will be back to single digit in both the calendar and fiscal years,” he noted.
In terms of monetary policy, the Finance Minister said there were several positives in this area, with the removal of the special deposit requirement for commercial and merchant banks, within the context of the relative stability of the foreign exchange market. The Bank of Jamaica (BoJ) removed the special deposit requirement for commercial and merchant banks on May 1, and later reduced interest rates on its open market instruments by between 15 and 20 basis points.
Dr. Davies noted that favourable macroeconomic conditions had positively impacted domestic interest rates, which declined three times during the review period to the lowest level in 20 years.
Turning to investor confidence, the Finance and Planning Minister said that there was a “tightening” of the yields for government of Jamaica (GoJ) external bonds as investor confidence remained positive. For the period, the Minister told journalists, the Net International Reserves (NIR) had been “much more buoyant than we had anticipated”, due to strong private capital flows.
“This is in the context of the Ministry of Finance still holding over $100 million from the 30-year bond, which will be utilized for the repayment of external debt,” the Minister expounded. The NIR now stands at approximately US$2.3 billion, exceeding the programme target by US$264.2 million.
On the matter of remittances Dr. Davies said, “we are ahead of the pace for 2005”, adding that, “it is within the context of no new taxes, that we have boosted revenue flows”.
He said that collections had been enhanced by the introduction of a number of initiatives including the Property Tax Arrears Project; the implementation of ‘easy payment’ facilities, including an ‘electronic drop box’ for cheque payments and returns filing; and an outbound call centre to assist with the management of tax arrears.