Grad­ual eco­nomic re­cov­ery is un­der­way in Ja­maica: IMF

The Pak Banker - - BUSINESS -

An In­ter­na­tional Mon­e­tary Fund (IMF) mis­sion led by Uma Ra­makr­ish­nan vis­ited Ja­maica to con­duct dis­cus­sions on the ninth re­view of Ja­maica's IMF-sup­ported pro­gram un­der the Ex­tended Fund Fa­cil­ity (EFF).

At the con­clu­sion of the mis­sion IMF Mis­sion Chief Ms. Ra­makr­ish­nan in a state­ment in Kingston said, "The mis­sion reached pre­lim­i­nary agree­ment with the author­i­ties on a pack­age of poli­cies that aims at com­plet­ing the ninth re­view un­der the EFF. Con­sid­er­a­tion by the IMF's Ex­ec­u­tive Board is ten­ta­tively sched­uled for Septem­ber 2015. Upon ap­proval, SDR 28.32 mil­lion (about US$40 mil­lion) would be made avail­able to Ja­maica".

"A grad­ual eco­nomic re­cov­ery is un­der­way. The growth out­look is im­prov­ing, although the drought is ham­per­ing agri­cul­tural re­cov­ery for the sec­ond year in a row. Growth is now pro­jected at 1.4 per­cent in 2015-16. The un­em­ploy­ment rate de­clined to 13.2 per­cent in April, with strong em­ploy­ment growth in tourism and in the busi­ness process out­sourc­ing (BPO) sec­tor. In­fla­tion re­mained at a his­toric low of 4 per­cent in July, in spite of higher food prices on ac­count of the drought. In­ter­na­tional re­serves have con­tin­ued to in­crease, stand­ing at US$2.4 bil­lion at end-July. "Pro­gram im­ple­men­ta­tion re­mains strong. All quan­ti­ta­tive per­for­mance tar­gets through end-June were met, with tax rev­enues ex­ceed­ing ex­pec­ta­tions. Struc­tural re­forms are also broadly on track.

"The re­cent PetroCaribe li­a­bil­ity man­age­ment op­er­a­tion is an im­por­tant step in re­duc­ing Ja­maica's public debt. The buy­back has im­me­di­ately re­duced the debt-to-GDP ra­tio by about 10 per­cent of GDP, and the Net Present Value (NPV) gain of the trans­ac­tion is es­ti­mated at about US$300 mil­lion. This proac­tive op­er­a­tion will help keep public debt on a clear down­ward tra­jec­tory, with debt-to-GDP now pro­jected at 125 per­cent by the end of this fis­cal year.

"We welcome the re­cent wage agree­ment be­tween the Gov­ern­ment of Ja­maica and the Ja­maica Con­fed­er­a­tion of Trade Unions (JCTU). Im­prov­ing the ef­fi­ciency, qual­ity and cost ef­fec­tive­ness of the public sec­tor is crit­i­cal for higher growth. Low­er­ing the wage-to-GDP ra­tio to the 9 per­cent tar­get for 2016/17 will cre­ate fis­cal space for cap­i­tal spend­ing, which will help the gov­ern­ment in­vest in long-term pri­or­i­ties.

"Con­tin­ued strong im­ple­men­ta­tion of the gov­ern­ment's growth strat­egy is es­sen­tial to sup­port job cre­ation and boost the econ­omy. We welcome the steps taken by the Elec­tric­ity Sec­tor En­ter­prise Team to lock in lower elec­tric­ity prices by di­ver­si­fy­ing sources of energy used for elec­tric­ity gen­er­a­tion be­yond oil. There is also scope for fur­ther im­prove­ments in the busi­ness cli­mate. En­hanc­ing ac­cess to credit for small and medium-sized en­ter­prises will im­prove fi­nan­cial in­clu­sion and sup­port pri­vate in­vest­ment.

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