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IMF stamped approval on 5th test without formal review

Published:Friday | October 3, 2014 | 12:00 AM
Bert van Selm, IMF representative to Jamaica. File

McPherse Thompson, Assistant Editor - Business

In yet another vote of confidence in Jamaica's management of its economic programme, the board of the International Monetary Fund (IMF) took the unusual step of stamping its approval on the fifth quarterly review without a formal meeting to assess the report of the technical team.

Usually, the IMF mission conducts the technical review and reports back to the board on whether the programme is on track. The board reviews the staff report and makes its own comments. Its approval of each test result is what triggers payouts to the recipient government.

The board approval for the fifth test review was the first to happen without a formal meeting since the agreement with Jamaica was struck in May 2013.

It triggered a payout of SDR 45.95 million - equivalent to about US$68.8 million - to be used directly for Government's financing needs.

That it was approved based on the fund's lapse-of-time procedures "is a good sign for Jamaica" and an indication of the IMF's confidence in the management of the economic programme, IMF Resident Representative Dr Bert van Selm told the Financial Gleaner.

Sixth review

However, he said the sixth review will be subject to examination at a formal meeting because the IMF's rules do not allow for the lapse-of-time procedure to be used for consecutive reviews.

"I wouldn't want to give the impression that conditions in Jamaica have deteriorated between the last review and the next, and hence the need for the sixth review to be subject to a formal meeting," he said.

The executive board takes decisions without a meeting when it is agreed that a proposal can be considered without convening formal discussions.

The board pronounced that the four-year extended programme was on track and said Jamaica's economic performance remained strong. It noted that gains from Jamaica's demanding reform programme were emerging and its external position has strengthened, helped by gains in competitiveness.

"Earlier projections of a gradual pickup in economic activity and employment and moderating inflation are playing out, although dampened in the near term by the effects of the recent drought," the IMF said.

The Statistical Institute of Jamaica reported this week that the Jamaican economy expanded by 1.8 per cent in the June quarter, when the economy created real value of $185 billion, or $371 billion at market value. The expansion resulted from a 6.3 per cent spike of output in the goods sector and 0.5 per cent uptick in services GDP.

The IMF projects that growth for the fiscal year ending March 2015 will come out above one per cent.

According to information on the IMF's website, completion of a review on a lapse-of-time basis may be proposed where performance under the IMF programme does not raise concerns, in particular as a result of deviations from the quantitative performance criteria and structural benchmarks.