Press Release: IMF Statement on the Conclusion of 2004 Article IV Consultation Discussions with Jamaica
June 4, 2004
"The IMF staff mission has concluded its visit to Kingston in connection with the IMF's annual Article IV review of the Jamaican economy. The staff appreciated the constructive and open discussions with the authorities, which covered recent economic developments, the near term outlook, and the authorities' strategy for the medium-term.
"Jamaica's improved economic performance over the past year-with stronger growth and declining inflation and interest rates-owes much to the government's renewed fiscal adjustment effort. The country has also benefited from the better international economic environment, especially the global economic recovery. Looking forward, the mission welcomes the authorities' intention to implement a strong adjustment and reform program to improve resilience to shocks, promote economic and financial stability, and lay the basis for sustained growth with reduced poverty.
"In that context, the discussions focused on the following areas:
· The Government's medium-term fiscal strategy, aimed at achieving debt sustainability through an ambitious and sustained budget adjustment. To this end, the Fund staff welcomed the authorities' intention to reduce the budget deficit to 3-4 percent of GDP in FY 2004/05, and balance the budget by FY 2005/06.
· The Government's structural and social policies to improve productivity and the environment for private investment. This is needed to spur growth, essential for debt sustainability as well as for poverty reduction. To these ends, beginning in the coming year, the authorities plan to simplify the tax system, strengthen tax and customs administration, improve public expenditure management, and develop measures aimed at reducing crime.
· The Government's steps to increase domestic consensus and ownership of reforms. To this end, the authorities have engaged in discussions with labor union and business leaders, and signed a wage restraint agreement with major public sector unions. The mission has also been encouraged in its discussions with representatives of the private sector by indications of an emerging consensus on the need for a broader social partnership.
· The Government's planned reforms to strengthen the stability of the financial sector. To this end, the authorities intend to strengthen the regulatory framework, in particular the prudential standards for securities brokers. The mission welcomes the authorities' request for participation in the joint IMF and World Bank Financial Sector Assessment Program in early 2005.
"The IMF Executive Board is expected to discuss the staff's detailed report and assessment of the authorities' program in the context of the 2004 Article IV Consultation this summer. The authorities have requested the Fund staff to undertake intensive surveillance of Jamaica's economic performance. In that context, a staff visit to assess the progress in implementing the Government's program is planned for the fall; that assessment will be reported to the Fund's Executive Board for information."