The Executive Board of the International Monetary Fund (IMF) completed on September 16, 2016 the thirteenth review of Jamaica’s economic performance under the program supported by a four-year, SDR 615.38 million (about US$932.3 million at the time of approval) arrangement under the Extended Fund Facility (EFF)1. The completion of the review enables an immediate disbursement of an amount equivalent to SDR 28.32 million (about US$39.6 million). The Board made the decision based on lapse-of-time procedures, without a formal meeting.2 The EFF arrangement was approved on May 1, 2013 (see Press Release 13/150).
Program implementation is on track. The authorities’ continued commitment to the demanding reform program even in the fourth year of the IMF-supported program is commendable. All quantitative performance criteria for end-June 2016, as well as the continuous quantitative program targets and structural benchmarks, were met. Domestic confidence indicators are at an all-time high, and there are improving signs of economic activity, including agricultural recovery, strong performance in tourism and manufacturing, increased FDI inflow, and stronger private sector credit growth. Real GDP growth is estimated at 1 percent for FY15/16, and is projected to reach 1.7 percent in FY16/17. Nevertheless, important risks to the program remain.
Higher growth dividends, more job creation, and improved living standards will be essential to maintain social support for the reform agenda. Safeguarding growth-enhancing capital spending is essential for employment and job-creation. Assessing banking sector competition, improving land titling, as well as developing mobile money and agency banking services will help alleviate constraints to financial inclusion and investment. The rebalancing from direct to indirect taxes provides an opportunity to improve compliance and increase incentives for production and effort. At the same time, protecting the poor and vulnerable is a high priority, which requires developing and implementing a well-designed plan to enhance Jamaica’s social protection framework to ensure inclusive and equitable growth. Controlling the wage bill and reprioritizing public spending to areas where the need is highest, including by delivering public services cost-effectively and efficiently, are vital to support a dynamic private sector.
[1] The EFF is intended for countries which are: (i) experiencing serious payments imbalances because of structural impediments; or (ii) characterized by slow growth and an inherently weak balance of payments position. It provides assistance in support of comprehensive programs that include policies aimed at correcting structural imbalances over an extended period. Financing under the EFF currently carries the IMF’s basic rate of charge, with a grace period of 4 years and a maturity of 11 years. (http://www.imf.org/external/np/exr/facts/eff.htm).
[2]
The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal discussions.
