JIS News

Story Highlights

  • Jamaica has successfully met and surpassed all targets for September under its Extended Fund Facility (EFF) with the International Monetary Fund (IMF).
  • Co-Chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, told journalists at its monthly press briefing on Thursday, November 6, that “this means that we are likely to pass the 6th quarterly IMF review.”
  • A review of the performance for the 6th quarter is currently underway by the IMF mission to Jamaica and the results will become available on December 22.

Jamaica has successfully met and surpassed all targets for September under its Extended Fund Facility (EFF) with the International Monetary Fund (IMF).

Co-Chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, told journalists at its monthly press briefing on Thursday, November 6, that “this means that we are likely to pass the 6th quarterly IMF review.”

A review of the performance for the 6th quarter is currently underway by the IMF mission to Jamaica and the results will become available on December 22.

Contributing to the positive performance for the quarter under review is strong performance in the primary surplus and the Net International Reserves (NIR).

Data provided by EPOC at the monthly press briefing shows that for the quarter ending September 2014, the country’s primary surplus balance stood at $43.6 billion, which is $5.8 billion better than the target of $37.8 billion.

A primary surplus occurs when the Government’s income exceeds its expenditure.

There was also better than expected performance in the NIR, which stood at US$2.2 billion at the end of September, which exceeds the US$ 968.3 million that was targeted.

NIR represents contingency funds, which can enable the country to survive severe external shocks and cope with shifts in investor confidence and natural disasters. It also acts as a measure of foreign goods and services that can be purchased over a period of time.

In the meantime, at the end of September, the Government’s tax revenues were $169 billion, which is $3 billion more than the IMF target of $166 billion.

However, Mr. Byles noted that the revenue from tax collections fell short of the Government’s own target of $176.4 Billion.

“As far as the IMF targets are concerned we met them, but the Government’s targets are a little more aggressive than the IMF’s” Mr. Byles noted.

He advised that this shortfall was due to an underperformance in corporate taxes and General Consumption Tax (GCT).

For the period, corporate taxes were $4.7 billion less than expected and collections from GCT were $3 billion less than targeted. “The Government compensated for this shortfall by cutting back on expenditure; $6.3 billion on the capital side and $5.6 billion on the recurrent side,” Mr. Byles informed.

Meanwhile, the EPOC Co-Chair pointed to an increase in the inflation rate, which stood at 2.1 per cent in June.

He attributed the rise to increases in transportation costs, tuition fees and food prices, but said he is “hopeful that going forward, if the drought is over and food supplies come back, prices can fall and cost of living retreat somewhat.”

Mr. Byles also noted the significant move the country made in the recent World Bank’s Doing Business report. The country’s ranking improved by 27 places from 85 to 58.

“This is really quite outstanding for Jamaica…interestingly, Jamaica is now the most highly rated Caribbean territory by the World Bank in respect of doing business,” Mr. Byles noted.

“I think this should be an encouragement to them (Government) to continue their efforts, that what they have been doing is bearing fruit, and they should persist and do more of it,” he asserted.

Overall, Mr. Byles said EPOC remains cautiously optimistic about the outlook of the Jamaican economy, despite the challenges the country faces with meeting tax revenue targets and achieving a wage bill of no more than nine per cent of Gross Domestic Product (GDP).

“Those are challenges that are not insurmountable, but which cause me to be somewhat cautious in my optimism for us and the IMF programme,” he added.

“Cautious because we really are in a very fragile small economy, the least little tremor affects our opportunities, affects our macro statistics. The drought, for example, is likely to take quite a toll on growth for the September quarter,” Mr. Byles outlined.