Statement at the Conclusion of an IMF Staff Mission to JamaicaPress Release No. 14/394
August 22, 2014
An International Monetary Fund (IMF) mission visited Jamaica during August 13-22, 2014 to conduct discussions on the fifth review of Jamaica’s IMF-supported program under the Extended Fund Facility (EFF). 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.
At the conclusion of the mission, Mr. Jan Kees Martijn, the Fund’s mission chief for Jamaica, issued the following statement in Kingston:
“The program is on track. Overall policy implementation under the program remains strong. All quantitative performance targets, indicative targets, and structural benchmarks for end-June were met. The Fund mission reached preliminary understandings with the authorities on economic policies, detailed in an updated Letter of Intent, that will support growth and employment in the months and years ahead.
“The economic outlook continues to improve. Activity is tentatively estimated to have expanded by about 1.2 percent year-on-year during April-June 2014. However, the recent drought will temporarily eat into near-term growth and raise food price inflation (and projections have been updated accordingly).
“Under the government’s policy program, the current account has steadily strengthened, and net international reserves have increased to US$2.2 billion by end-July (with gross reserves at US$2.8 billion). Jamaica has also re-accessed international capital markets with a US$800 million external bond issued in early July. The fiscal position remains on track to achieve an impressive 7.5 percent of GDP primary surplus by the end of the fiscal year.
“For 2014 and beyond, the critical challenge remains to support economic growth and job creation while sustaining a strong fiscal position. Key elements of the authorities’ program include:
- Actions to promote growth and employment by improving competitiveness and the business climate. Legislation supporting flexible work arrangements and a law to modernize the insolvency framework have been tabled in Parliament and are expected to be adopted shortly. Work on the new North-South highway is moving ahead, following the opening of the Mount Rosser bypass in August;
- Strengthening social protection and enhancing efforts to provide support for those aiming to move from welfare to work;
- Improving the efficiency of the tax system, including by offering amendments to the General Consumption Tax (GCT) Act to broaden the tax base and eliminate the zero rating of government purchases under the GCT;
- Creating a dedicated office to modernize the tax and customs administration and implementing pilot programs to automate the tax and customs administration systems;
- Increasing the efficiency of the public sector while improving the quality of the delivery of public services;
- Strengthening the legal and regulatory framework for the non-bank financial sector, and implementing the Banking Services Act, adopted in June.
“These preliminary understandings are subject to approval by the IMF’s Management and Executive Board. Consideration of the fifth review of Jamaica’s IMF-supported program under the EFF could take place by the IMF’s Executive Board in September. Upon approval, SDR 45.95 million (about US$71 million) would be made available to Jamaica.
“The mission would like to thank the authorities and technical staff for their excellent cooperation and kind hospitality.”