Jamaica Participating in Financial Sector Assessment Programme

Jamaica is among several countries participating in a Financial Sector Assessment Programme (FSAP), aimed at assessing the soundness of the financial system and its vulnerability to shocks. The assessments, which are conducted jointly by the International Monetary Fund and the World Bank, in collaboration with the participating country, also review the observance and implementation of the relevant international financial sector standards and codes.
Jamaica’s assessment commenced on Monday, (May 9) and will involve a comprehensive evaluation of critical aspects of the financial sector framework.
Governor of the Bank of Jamaica (BoJ), Derick Latibeaudiere who made the disclosure during his quarterly press briefing in downtown Kingston today (May 12), said the exercise was one way of further ensuring the resilience of the country’s financial system, as with the economy entering a new phase of development and growth, its financial institutions would face new risks.
The Governor said the FSAP exercise had the potential to be of significant value to domestic policymaking, and should assist in moving the financial system further towards full convergence with internationally accepted best practices.
He further noted that the FSAP offered the opportunity for valuable review by international experts and should also provide the basis for a more consistent and comprehensive framework within which to analyze the stability of the financial sector and prioritize its development needs.
The current FSAP team, which was invited by the Jamaican government, would remain in the island until May 27 in the first of a two-part mission, the second of which is scheduled for July 2005.
Over the last decades, 75 per cent of IMF member countries have experienced financial crisis. Against this background a global effort to preserve financial stability and maintain orderly international financial conditions emerged.
Designed to provide comprehensive analysis of a country’s financial system, the FSAP programme is intended to reduce the likelihood of a financial sector crisis. Jamaica’s participation this year comes against the background of the Government of Jamaica’s intention to assess the strengths and vulnerabilities of the island’s financial system.
The FSAP has helped to ensure that financial sector analysis becomes part of the core of economic policymaking. It also provides a strategic framework for strengthening and developing a country’s financial system. In many cases an FSAP has highlighted the need to reinforce banking supervision, improve financial sector legislation, reduce risks in payment and securities settlement systems, and strengthen sovereign debt management.
This assessment programme will not, by itself, protect countries against all financial crises, but it can, over time, reduce the incidence of crises by providing authorities with a thorough and objective review of their financial sectors, identify weaknesses early and suggest effective and timely policy responses.
As at June 2004, 62 countries had completed an FSAP, 28 countries had an FSAP underway, 18 had confirmed participation and 15 had FSAP updates near completion.