IMF Staff Concludes Visit to Jamaica
IMF News, December 7, 2018
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Bibliographic details
- Published: December 7, 2018
Mission summary
- An IMF staff team led by Uma Ramakrishnan visited Kingston from December 3 to 7, 2018, to take stock of progress on Jamaica’s economic reform program supported by the IMF’s precautionary Stand-By Arrangement (SBA).
- The mission will not result in a Board discussion.
- Meetings included Prime Minister Andrew Holness, Minister of Finance and the Public Service Dr. Nigel Clarke, Bank of Jamaica Governor Brian Wynter, high-level officials from ministries, agencies and the central bank, private sector representatives, labor unions, and the opposition.
Key economic indicators and outlook
- Unemployment rate: at an all-time low of 8.4 percent, with significant gains among women and younger workers.
- Inflation: in the Bank of Jamaica’s (BOJ) target range of 4–6 percent.
- Gross international reserves: US$3.4 billion at end-November.
- Growth for this fiscal year: expected to be 1½–2 percent.
- Current account: lower global oil prices, if sustained, should support a narrower current account deficit and support domestic demand.
Public finances and fiscal risks
- Continued buoyancy in tax revenue is supporting more capital spending, helping economic activity and living standards.
- Public debt: expected to fall below 100 percent of GDP by the end of this fiscal year, for the first time since FY2000/01.
- Fiscal risk: Protracted wage negotiations with the unsettled groups create budgetary uncertainty and pose risks to the positive outlook.
- Policy implications:
- Budgetary uncertainty from wage negotiations could weigh against efforts to reallocate resources away from the wage bill toward priority spending areas such as crime, social protection, and disaster resilience.
- Beyond current negotiations, more fundamental reforms to the compensation framework for public sector employees and a streamlining of government functions will be necessary to sustainably reduce the wage bill.
Financial sector reforms and supervision
- The BOJ and the Financial Services Commission (FSC) are jointly undertaking a risk-based pilot program for consolidated supervision, informed by the recent IMF’s Financial Sector Assessment Program (FSAP).
- There is close cooperation between the BOJ and the FSC aimed at better monitoring and sharing of financial sector regulatory information.
- Reforms focus on:
- Rolling out risk-based consolidated supervision.
- Enhancing supervisory capacity.
- Introducing changes to investment limits and liquidity requirements.
Selected IMF statement excerpts
- “Positive developments continue to sustain Jamaica’s economic reform program. The unemployment rate is at an all-time low of 8.4 percent, with significant gains among women and younger workers. Inflation is in the Bank of Jamaica’s (BOJ) target range of 4–6 percent. Gross international reserves were at US$3.4 billion at end-November. Growth for this fiscal year is expected to be 1½–2 percent. Looking ahead, lower global oil prices, if sustained, should support a narrower current account deficit and support domestic demand.”
- “Continued buoyancy in tax revenue is supporting more capital spending, helping economic activity and living standards. Public debt is expected to fall below 100 percent of GDP by the end of this fiscal year, for the first time since FY2000/01.”
- “Protracted wage negotiations with the unsettled groups, however, pose risks to this positive picture as they create budgetary uncertainty. This could weigh against efforts to reallocate resources away from the wage bill and toward priority spending areas such as crime, social protection, and disaster resilience. Beyond the current wage negotiations, more fundamental reforms to the compensation framework for public sector employees and a streamlining of government functions, will be necessary to sustainably reduce the wage bill.”
- “The BOJ and the Financial Services Commission (FSC) are jointly undertaking a risk-based pilot program for consolidated supervision, informed by the recent IMF’s Financial Sector Assessment Program (FSAP). There is also close cooperation between the BOJ and the FSC aimed at better monitoring and sharing of financial sector regulatory information.”
Press contact
- MEDIA RELATIONS — PRESS OFFICER: Randa Elnagar
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org
Source: IMF Staff Concludes Visit to Jamaica (Press Release No. 18/459), December 7, 2018.