Significant Achievements Under IMF Programmes – Dr. Clarke

Finance and the Public Service Minister, Dr. the Hon. Nigel Clarke, says the impending conclusion of Jamaica’s precautionary Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) will mark a significant milestone for the country.

“It represents the second time that Jamaica has successfully completed a Fund programme, [following] our early termination of the Extended Fund Facility [EFF],” Dr. Clarke said.

He was speaking at a media round-table forum at the Finance Ministry in Kingston on Friday (September 20).

Jamaica’s current relationship with the IMF started in 2013 when the country entered into the four-year US$932-million EFF. This was replaced by the US$1.7-billion SBA in 2016, which concludes in November.

Dr. Clarke noted that Jamaica has recorded several achievements under the SBA, including a reduction in unemployment from 13.7 per cent in April 2016 to 7.8 per cent as at April 2019.

“Over that time, some 75,000 jobs have been created. Youth unemployment fell from a high of 32 per cent in April 2016 to 19.5 per cent in April 2019, and the number of persons employed in Jamaica, as at April 2019, was 1.25 million, the most that have ever been employed in the country,” the Minister pointed out.

Additionally, Dr. Clarke said Jamaica has recorded 18 consecutive quarters of economic growth.

“I believe that this programme would be the only [one] that Jamaica has entered into under which, in every single quarter, the country has registered economic growth, albeit not as high as we’d want,” he said.

Other key out-turns, the Minister noted, include low single-digit inflation over the period of the SBA; and Net International Reserves (NIR) totalling more than US$3 billion, with Non-Borrowed Reserves at the Bank of Jamaica (BOJ) increasing by more than US$1 billion over the course of the three-year precautionary programme.

Additionally, he said the Central Bank has reduced the policy interest rate on deposit-taking institutions’ overnight placements 11 consecutive times.

This, according to Dr. Clarke, has led to the lowest interest rates for consumers and businesses ever in Jamaica’s history, while adding that credit growth has accelerated at a rate of 16 per cent per annum.

He further indicated that distortionary taxes have been abolished, including the minimum business tax and asset tax for non-financial businesses which were an impediment to micro and small business development.

Additionally, the Minister said the ad valorem stamp duty was abolished, dramatically reducing the transaction cost involved in the process of home ownership.

He further cited the “transformative” reduction in Jamaica’s debt under both the EFF and SBA, from 147 per cent to 95 per cent of gross domestic product, as at March 2019.

Dr. Clarke said technical analysis indicates that at the start of the SBA, Jamaica would have had 77 per cent of the reserves that were required for a country of Jamaica’s size and complexity.

“At the end of the programme, the same technical analysis shows that our reserves stand at 115 per cent of the requirement, giving us that extra buffer in the event of exogenous shocks,” he noted.

While acknowledging that “a lot of work is left to be done”, Dr. Clarke said “it is useful to pause and consider the progress that we have made over this time”, adding that “the successes of the programme are evident in those numbers and the experience we all share in”.