Press Release No. 15/213

Press Release: IMF Staff Concludes Review Mission to Jamaica

May 12, 2015

An International Monetary Fund (IMF) mission visited Jamaica during May 4–12, 2015, to conduct discussions on the eighth review of Jamaica’s IMF-supported program under the Extended Fund Facility (EFF).

At the conclusion of the mission IMF Mission Chief Mr. Jan Kees Martijn and incoming Mission Chief Ms. Uma Ramakrishnan issued the following statement in Kingston:

“The mission reached preliminary agreement with the authorities on a package of policies that aims at completing the eighth review under the EFF. Consideration by the IMF’s Executive Board is tentatively scheduled for June 2015. Upon approval, SDR 28.32 million (about US$40 million) would be made available to Jamaica.

“Over the past two years, Jamaica has adopted ambitious policy changes that have laid the foundation for a gradual recovery of economic growth and employment. Although painful in the short run, these policies are now starting to bear fruit.

“The economic outlook is improving. Growth is expected at about 2 percent in 2015–16, supported by both domestic and global trends. Inflation fell to 4 percent in March 2015, the lowest in many years, reflecting lower fuel and electricity costs and moderating food prices. International reserves continue to increase, while debt has been put firmly on a downward trajectory.

“Business and consumer confidence are both growing rapidly. Strengthening confidence in Jamaica’s economic policies is evidenced by the narrowing sovereign bond spread relative to the emerging market average.

“Program implementation remains strong. All quantitative performance targets through end-March were met, with the exception of the target for the primary surplus of the central government, which was narrowly missed as revenue came in lower than projected in 2014/15. Nonetheless, the primary surplus is still estimated at 7.5 percent of GDP—the central fiscal anchor of the program. Expenditures were broadly aligned with the reduced resource envelope, and the overall balance of the public sector was stronger than targeted under the program.

“The budget for 2015/16 that was adopted by Parliament in March aims for maintaining the primary surplus at 7.5 percent of GDP for a third consecutive year. The budget offers room for additional spending, in particular on medication and medical supplies. Safeguards to achieve the primary surplus target include a revenue package which is expected to yield J$10 billion or 0.6 percent of GDP and ongoing reforms of the revenue administration.

“The economic policies in the updated economic program aim to support economic growth and job creation while maintaining prudent fiscal policies. Important actions to improve the business climate include efforts to reduce the cost of electricity on a sustainable basis, streamline the approval process for construction permits, and make it easier to start a business. Sustaining the fiscal position over the medium term will require further steps to broaden the tax base and improve public sector efficiency.

“Financial sector stability is being strengthened through progress in implementing the Banking Services Act, enhancing contingency planning and resolution frameworks, ongoing reforms in the securities dealers sector, and revamping depositor and investor protection.   

“The mission met with the Minister of Finance and Planning, Dr. the Hon. Peter Phillips, Bank of Jamaica Governor Brian Wynter, Financial Secretary Devon Rowe, senior government officials, as well as representatives of the private sector and civil society. The mission would like to thank the authorities and technical staff for their cooperation and hospitality.”