Press Release No. 13/186

Press Release: IMF Concludes Staff Visit to Jamaica

May 21, 2013

An International Monetary Fund (IMF) mission led by Jan Kees Martijn visited Jamaica during May 16-22, 2013 to assess recent economic developments and discuss initial implementation of economic reform policies under the Extended Fund Facility (EFF)-supported program. The mission met with the Minister of Finance, Hon. Peter Phillips, Bank of Jamaica Governor Brian Wynter, Financial Secretary Devon Rowe, senior government officials, and representatives of the private sector and civil society. At the conclusion of the mission, Mr. Martijn issued the following statement in Kingston:

“Recent economic developments confirm both Jamaica's economic challenges and the improved fiscal outcomes. The authorities estimate that economic activity contracted by 0.5 percent in FY2012/13 (April to March), as confidence remained low, and unemployment remained high at 14.2 percent at end-January 2013, despite an increase in jobs. Inflation was contained, averaging 7.2 percent in FY 2012/13. Fiscal performance for FY2012/13 outperformed projections, with the central government primary surplus improving to 5.4 percent of GDP, mainly owing to a decline in primary expenditure. The cash balance of the public bodies is also estimated to have performed better than projected, underpinning progress toward the target of maintaining a near-balanced budget. With an elevated external current account deficit (11.5 percent in FY12/13) and delayed foreign inflows, international reserves remained below US$1 billion.

“The mission emphasized the importance of strong program implementation to put the public debt on a firm downward trajectory, bolster investor confidence, facilitate the timely provision of budget support by foreign partners, and provide a foundation for sustained growth. We reiterated that the authorities’ multi-layered reform agenda— comprising ambitious fiscal consolidation, improvement in competitiveness, debt reduction, and improved social protection—would require strong resolve, and was necessary to decisively tackle Jamaica's long-standing challenges and restore growth.

“The mission was encouraged by the steady progress in implementing the fiscal program and structural reform agenda, starting with the completion of reforms just ahead of the IMF’s Executive Board meeting. The FY2013/14 budget, tabled in Parliament in April, is in line with the government’s program and targets a central government primary surplus of 7½ percent of GDP. Also, work is progressing on tax incentives and charities legislation, on the tax reform agenda, and on actions to improve public financial management and the business climate.

“IMF staff, together with other international partners, support the Jamaican authorities’ commitment to address long-standing structural impediments to growth. We emphasized that, although the full benefits of the reform agenda may take time to materialize, the reforms are urgent and fair burden sharing essential, to ensure a more prosperous future for Jamaica.

“The mission expresses its deep appreciation to the authorities and technical staff for their excellent cooperation, and looks forward to the first program review mission in August.”