Finance and Planning Minister, Dr Peter Phillips (left), emphasizes a point during Friday’s media briefing, when details were provided on Jamaica’s International Monetary Fund (IMF) fourth quarter review, for the January to March 2014 period. Listening is Head, IMF Staff Mission Team to Jamaica, Dr Jan Kees Martijn. Photo: Yhomo Hutchinson
By Douglas McIntosh
KINGSTON, Jamaica (JIS) -- Jamaica is on course to pass its fourth International Monetary Fund (IMF) quarterly review, for the January to March 2014 period, to secure a fifth drawdown of US$71 million, under the country’s US$958 million four-year extended fund facility (EFF) agreement.
Head of the IMF staff mission team to Jamaica, which conducted the review, Dr Jan Kees Martijn, said the continued improvements recorded by the economy during the quarter have contributed to the positive outcome, consequent on the government’s implementation of the country’s economic reform programme (ERP).
The team conducted its review between May 5 and 16, and also had consultations and discussions with officials and technocrats of the finance and planning ministry in relation an IMF Article IV assessment, which entails a comprehensive review of the economy during the programme’s first year.
Having completed its work, the team will now submit its report to the IMF management, and executive board, for consideration and discussion. The board is expected to make the final decision on Jamaica’s drawdown entitlement by June 30.
The fourth quarter review comes one year after the government and IMF signed off on the EFF. Jamaica has, to date, secured in excess of US$300 million in funding support under the facility.
Details of the mission team’s two-week engagements were outlined during a media briefing on Friday.
In his remarks, Martijn said Jamaica’s economic outlook is improving, and cited economic growth, improved balance of payments and net international reserves (NIR), and declining inflation as key indicators of this.
Additionally, he said the government’s execution of the 2013/14 Budget was “on track,” primarily due to what he noted were shortfalls in revenue collection being offset through strict expenditure control.
Martijn pointed out that “much has been achieved” during the first year of the economic programme, adding that “we have seen significant progress in implementing the needed reforms.” He also highlighted significant fiscal adjustments undertaken by the government to secure a 7.5 per cent primary budgetary surplus. “That is exceptional, by international standards,” he added.
Importantly, the mission head cited steps taken to sustain those adjustments through engagements, inclusive of tax reform “and the institutionalization of a meaningful fiscal rule.”
He added that the financial system framework has been “fortified,” monetary policy “restrained,” and the exchange rate “has helped to restore a good deal of Jamaica’s lost competitiveness.”
Martijn said that “the programme is on track,” and that the mission team and government have reached “preliminary understandings” on a set of policies going forward that will be detailed in an updated letter of intent to be submitted to the IMF in June. These preliminary understandings, he advised, are still subject to approval by the IMF’s management and executive board.
While noting that the “social cost” of the adjustment effort has been “substantial,” he said the recovery being recorded remains “tentative,” and investor confidence “hesitant,” and cited the need higher growth and job creation.
Meanwhile, finance and planning minister, Dr Peter Phillips, also cited the achievements recorded under the economic programme’s first year.
He said that programmes during the second year will include: additional measures to enhance the ease with which private sector conducts business; institutional arrangements for effective implementation of the fiscal rule; and public sector modernization.
Additionally, he said the government will pursue reforms to further strengthen the financial sector and advance implementation of major growth projects, such as port expansion, agro parks and infrastructure development, and the logistics hub initiative.
The minister also noted parliamentary approval of the 2014/15 Budget, which he said is “consistent with the programme’s target of a 7.5 percent primary balance.”
He added that it is also consistent with “our objective for a further reduction in the debt-to-GDP ratios, so that we can reach the ratio of below 100 per cent by fiscal year 2019/20.”
“These targets will be achieved through continued improvements in public sector financial management, broad tax reform, and the strengthening of tax administration to achieve, among other things, greater levels of compliance,” the minister said.
Phillips assured that the administration remains committed to strategies to protect the nation’s vulnerable, and to maintain a floor on social expenditure to strengthen the social protection framework.
The minister advised that the reform strategies and policies, “to take us into the future,” will be outlined in a comprehensive and updated memorandum of economic and financial policies (MEFP) that will be presented to Cabinet and Parliament.