KINGSTON — Speculation about the date of the next General Election could add to the uncertainties created by the International Monetary Fund's (IMF) delay in reviewing the medium-term economic programme, says Governor of the Bank of Jamaica, Brian Wynter.
Mr. Wynter was speaking at a media briefing to present the Monetary Policy Report for the July–September 2011 quarter at the Bank, Nethersole Place downtown Kingston, Wednesday (November 9).
Outlining other possible risks to the BOJ’s projections for inflation and economic growth, Mr. Wynter said that adverse weather conditions could derail both forecasts, while an unfavourable international environment could depress economic growth although leading to a better-than-expected inflation outturn.
He said that, in addition, the persistence of weak domestic demand could also lead to lower output, but a more satisfactory inflation rate. Conversely, improvements in the global economy could lead to sharper increases in commodity prices, hence higher-than-expected inflation, but would spur increased demand for Jamaican goods and services.
The Central Bank Governor noted that discussions are continuing with the IMF, and that the Government is engaged in talks with public sector unions on a way forward. He also pointed to the ongoing public consultations on the proposals for tax reform.
He reiterated that one of the structural benchmarks under the Stand-By Arrangement with the IMF is to amend the Bank of Jamaica Act, to give the Bank overall responsibility for financial stability.
"Already approved by Cabinet, the proposals have also received comments from a number of stakeholders. The responsibility for financial stability being initiated in Jamaica is similar to what is being done by countries around the world," Mr. Wynter noted.
He also observed that the recent global financial crisis clearly indicated the need for a single authority to be in charge of macro-prudential regulation, with the capacity to recognize and address systemic risks.
"Jamaica's initiative to formalize the financial stability role is based on a survey of international experience, as well as our own experience," he said. A discussion paper on the issue is on the Bank's website, and Mr. Wynter encouraged public participation in the promulgation of the new policy.
The BOJ Governor stated that the country’s macroeconomic indicators continue to point in the right direction.
"The Government is continuing to pursue the policies that underwrite long-term fiscal and debt sustainability, which in turn support macroeconomic stability," he pointed out.
Against that background, Mr. Wynter said that the Central Bank will continue to monitor domestic and international economic developments, and pursue policies consistent with ensuring price and financial system stability".
By Allan Brooks, JIS Senior Reporter