- The approval, which is expected by the end of March, will pave the way for a fourth drawdown of funds totalling US$71 million under the programme.
- The impending approval by the IMF’s Management and Executive Board is based on the country’s positive performance under the Government’s economic reform programme.
- Jamaica’s economic activity has been positive and remains broadly in line with the IMF’s projections.
Jamaica is on target to pass the International Monetary Fund’s (IMF) third quarterly economic review, under the four-year Extended Fund Facility (EFF).
The approval, which is expected by the end of March, will pave the way for a fourth drawdown of funds totalling US$71 million under the programme.
This was disclosed by Head of the IMF Staff Mission Team to Jamaica, Dr. Jan Kees Martijn, during a press briefing at the Ministry of Finance and Planning’s National Heroes Circle offices in Kingston on February 13.
According to Dr. Martijn, the impending approval by the IMF’s Management and Executive Board is based on the country’s positive performance under the Government’s economic reform programme for the third quarter of the fiscal year, between October and December, which recorded growth of about 1.4 per cent.
An IMF Mission, led by Dr. Martijn, has been in Jamaica from February 5 to 13 to undertake the third review of Jamaica’s performance under the EFF, which was approved last May. Jamaica has, so far, had two positive reviews for the June and September quarters.
Dr. Martijn informed that the week’s discussions were focussed on the country’s economic performance under the programme and the policies for the remainder of its period.
He advised that the team has reached a preliminary understanding with the Government on a set of guidelines detailed in an updated Memorandum of Economic and Financial Policies.
He said Jamaica’s economic activity has been positive and remains broadly in line with the IMF’s projections.
“The execution of the Government budget for 2013/2014 has been broadly on track, notwithstanding shortfalls in tax revenues, owing in particular to weak domestic demands,” he stated.
Dr. Martijn also advised that overall policy implementation under the programme remains strong, with all quantitative and indicative targets for the end of December being met, including the floor on social spending.
Furthermore, he said, all structural benchmarks under the programme have been met thus far.
Dr. Martijn informed that for 2014 and beyond, the critical challenges remain to support economic growth, while continuing to undertake the necessary fiscal adjustments.
He noted that key elements of the updated programme include actions to promote growth by improving competitiveness and the business climate and pursuing strategic investments. “This is supported in particular by the World Bank and the Inter-American Development Bank (IDB),” he stated.
In the meantime, Finance Minister, Dr. the Hon. Peter Phillips advised that the March quarter will be challenging, given the programme of work, Parliamentary agenda and the “very steep targets” that have been set. He, however, said the Government remains resolute that all targets will be met.
He informed that some of the major issues identified for the programme going forward include the macro-framework, design and implementation of the fiscal rule, tax reform and administration, and most importantly, accelerating economic growth.
“Notwithstanding the challenges, broad understandings have been reached on these issues and correspondingly, on the text of the supplemental Memorandum of Economic and Financial Policies and Technical Memorandum of Understanding,” he stated.
Dr. Phillips further noted that the Government believes the next phase of the programme should place significant emphasis on the growth agenda. He said the administration, therefore, agrees with the IMF that further and more expeditious improvement in the business environment is needed for sustainable growth.
“However, there is an urgency to create a more enabling macro-economic environment, which would be supportive of stronger investor confidence. It is therefore important that the discussions continue on the modification to the framework that is possible and the associated tradeoffs,” he emphasised.
Dr. Phillips said he also sees the next phase of the programme as one of consolidating the gains that have been achieved thus far.
As such, he said, the Government, with continued support from its multilateral development partners, will be pursing major reforms. These include public sector financial management and overall public sector modernisation; fiscal rule; Omnibus Banking; and reforms to securities dealer’s sector, for which work is well-advanced.