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The Mission from the International Monetary Fund (IMF), which reviewed Jamaica’s economic programme under the Stand-By Arrangement, has recommended that the Fund relax the primary surplus fiscal target for this year by 0.3 per cent of gross domestic product (GDP).
At a press briefing on the country’s performance for the quarter ending in September, held at the Ministry of Finance and the Public Service, on Friday November 19, Head of the IMF mission, Trevor Alleyne, said all the quantitative performance targets for the quarter were met.
“The central government primary surplus came in slightly above target with revenues broadly in line with projections and primary spending contained below programme projections. The deficit of the public entities was significantly smaller than projected. Net International Reserves substantially surpassed the end-September target,” he pointed out.
Despite the good review, Minister of Finance and the Public Service, Honourable Audley Shaw, noted that following the devastation caused by Tropical Storm Nicole, things will become more challenging over the next few weeks. He said the initial estimates for the damage caused by Nicole were put at about $12 billion.
Mr. Alleyne also agreed that there were risks related to spending overruns as a result of the damage to infrastructure caused by Tropical Storm Nicole. He said it was for this reason that the Mission will be recommending to the Board of the IMF that the targets be relaxed for the 2010/2011 fiscal year. This is the second time the targets are being relaxed, after a 0.4 per cent relaxation in the last quarter.
He informed that economic growth has been revised downward to about -0.5 per cent, reflecting the impact of lower than projected growth in Jamaica’s trading partners, the negative impacts of Tropical Storm Nicole and crime disturbances.
The IMF representative shared that the mission discussed macro-economic reforms that could help to spur growth and said “the authorities have reiterated their strong commitment to the programme’s policies and objectives, which aim at correcting long standing economic distortions and structural imbalances.”
He said the series of corrective measures identified by the authorities would be included in the upcoming Supplementary Estimates.
Mr. Alleyne announced that an update of the draft Letter of Intent, to include measures to address the spending overruns, is currently underway and that the Mission is expected to return to Jamaica to complete discussions on the document as soon as it is complete.
Jamaica successfully negotiated a US$1.2 billion loan from the International Monetary Fund (IMF) under a Stand-by Arrangement early this year, to help with budgetary support.