Jamaica set for further draw-down from IMF

Jamaica seems set to receive approval for draw down of SDR 45.95 million (US$71 million) from the International Monetary Fund (IMF).

This follows a successful fifth Staff Review of the country’s performance under the four-year Extended Fund Facility (EFF), which was conducted from August 12 to 22. The IMF mission assessed the performance for the quarter ending June 2014 and the outlook going forward.

The Fund’s Management and Executive Board will consider the review in September.

Speaking at a press conference at the Ministry of Finance and Planning’s National Heroes Circle offices in Kingston today (August 22), Portfolio Minister, Dr. the Hon. Peter Phillips, said funding approval is anticipated given the country’s strong performance to date and continued commitment to the implementation of the programme.

He pointed out that the Fund staff has concluded that despite the challenges, economic recovery continues; Jamaica’s economic performance is consistent with the programme; and structural reforms have been progressing.

“Fiscal performance continues to achieve and support the debt reduction objective, external accounts are improving, economic growth is continuing and the quantitative fiscal and monetary performance criteria under the programme have been met and the Government has also implemented all the structural benchmarks,” he said.

Dr. Phillips noted that the documentation of Jamaica’s performance as well as time-bound commitments under the economic transformation programme are outlined in a Letter of Intent, which is to be submitted to the Executive Board of the IMF in September.

The Finance Minister said the Government and Fund staff are of the view that “we need to continue to focus our energies on strengthening the growth in the economy.”

“The Government of Jamaica is committed to continuing the extensive programme of reforms of tax and public sector financial management, public sector modernization, labour market reforms, all of which are important elements of the programme going forward,” he said.

The Minister further pointed out that significant progress has been made in strengthening the financial sector with the passage of the Banking Services Act, which has been done with the support of the Fund.

“Progress has also been made on the framework for reforming the non-bank financial sector.  These reforms will address risks inherent in Jamaica’s highly interconnected financial system,” he said.

In the meantime, the IMF’s mission chief to Jamaica, Jan Kees Martijn, concurred that the programme is on track, noting that overall policy implementation under the programme remains strong.

“The economic outlook continues to improve. Activity is tentatively estimated to have expanded by about 1.2 per cent year-on-year during April to June 2014. However, the recent drought will temporarily eat into near-term growth and raise food price inflation and we have adjusted our projections accordingly,” he said.

Mr. Martijn noted that under the Government’s policy programme, the current account has steadily strengthened and net international reserves have increased to US$2.2 billion by the end of July, with gross reserves at about US$2.8 billion.

“Jamaica has also re-accessed international capital markets with a US$800 million external bond issued in early July. The fiscal position remains on track to achieve an impressive 7.5 per cent of Gross Domestic Product (GDP) primary surplus by the end of this fiscal year,” he said.

Mr. Martijn noted that for 2014 and beyond, “the critical challenge remains to support economic growth and job creation while sustaining a strong fiscal position”. To date, Jamaica has secured US$414.4 million in funding support under the facility.