“Consideration by the IMF’s Executive Board is tentatively scheduled for April 2017. Upon approval, an additional SDR 126 million (about US$170 million) will be made available for Jamaica, bringing the total accessible credit to about US$574 million,” said Uma Ramakrishnan, who led an IMF Mission here from February 20 to March 3.
The delegation met with Prime Minister Andrew Holness, Finance Minister Audley Shaw, Bank of Jamaica (BOJ) Governor Brian Wynter, as well as other stakeholders including members of the private sector, labour unions and civil society
She said the Jamaican authorities continue to view the SBA as precautionary, and use it as an insurance policy against unforeseen external economic shocks beyond Jamaica’s control.
“The SBA is off to a strong start, programme conditions through December were met, with tax revenues and international reserves exceeding expectations; and structural reforms are taking hold.
“With 7 consecutive quarters of positive growth, the Jamaican economy is on track to reach a growth rate of 1.7 per cent in financial year 2016/17. Growth is projected to continue improving to 2.1 per cent in financial year 2017/18, bolstered by construction, increased room capacity in the tourism sector, business process outsourcing, and a recovery in mining.”
Ramakrishnan said the current account deficit is down to about three per cent of gross domestic product (GDP), supporting robust growth in non-borrowed reserves, which reached almost US$1.8 billion by end-February.
She said employment is steadily improving but the unemployment rate remains high at 12.9 per cent, reflecting an expanding labour force.
“The financial year 2017/18 budget tabled in Parliament targets a central government primary surplus of 7 percent of GDP. On the revenue side, the shift from direct to indirect taxes continues with the second phase of the personal income tax (PIT) reform that raises the PIT exemption threshold to J$1.5 million.(One Jamaica dollar =US$0.008 cents).
She said the government underlined its commitment to supporting this reform with a revenue-neutral tax package that maintains fairness, progressivity and efficiency.
“To insulate Jamaica’s poorest citizens from the effects of these changes in tax policy, the government has significantly increased its budget allocation for social protection programs such as PATH. The budget also frees up resources for growth-enhancing capital spending by continuing the government’s prudent approach to public sector wage and employment policy,” Ramakrishnan said
She told reporters that steadfast implementation of the government’s reform programme is essential for continued macroeconomic stability, growth and job creation.
“This will require a sustained, multi-year focus on improving public sector efficiency and maintaining the government’s wage bill on a firm downward path. Next steps include passing the pension bill and rolling out an early retirement program, finalizing the medium-term compensation policy for government workers, consolidating public bodies, and accelerating the introduction of the human resources software.”
Ramakrishnan said further enhancing financial sector supervision and crisis preparedness, including through the adoption of a robust crisis resolution framework, are near-term priorities.
“Increasing the operational autonomy and accountability of the BOJ and improving the ways in which it interacts in the currency markets to make those interactions more efficient and more market-based will support the intended transition to an inflation targeting framework for monetary policy,” she added.
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