Speed up reforms to improve business environment – IMF
The International Monetary Fund (IMF) said that while Jamaica's ongoing economic stabilisation and debt reduction were essential pillars of the growth strategy, reforms to enhance the business climate should be accelerated.
This includes cutting red tape, reforming the energy sector and making the public sector more client-oriented, deputy managing director and acting chair of the executive board, Naoyuki Shinohara said following the sixth review of Jamaica's economic performance under the four-year extended fund facility last Friday.
He said the Jamaican authorities' commitment to the programme remained strong, that fiscal performance was broadly on track and all quantitative-performance targets for the last quarter were met. In addition, structural reforms have progressed on schedule.
"Macroeconomic performance under the programme continues to be good, and growth is showing signs of picking up," Shinohara said.
"Wide-ranging actions to boost growth and employment are, nonetheless, critical for the success of the programme," he added.
Shinohara said that achieving the programme's ambitious fiscal goals on a sustained basis will require further actions to strengthen public financial management and revenue administration, and to contain the wage bill.
"The preparation of the 2015-16 budget offers an opportunity to strengthen the quality of the fiscal adjustment, including by advancing public-sector reform. These efforts will help provide additional resources for priority budgetary outlays," he added.
"Expeditious implementation of the plans for financial-sector reform, including by bringing into effect the Banking Services Act and the new framework for repo transactions, combined with strong contingency planning and resolution frameworks, will improve the soundness of the financial system," said the IMF Deputy Managing Director.
Under the agreement with the IMF, the Government said it is implementing measures to protect the interest of retail repo clients.
It said that in consultation with Fund staff, it will establish a distinct treatment for retail repo client interests in the legal and regulatory framework in order to protect their interests prior to and in the event of the insolvency of a securities dealer.
This will entail establishing a trust to hold the underlying securities on their behalf during the term of the repo. The legal and regulatory framework will comprise, among other things, the standardized legal documentation for the retail repo transactions, including a master retail repurchase agreement and trust deed, and reporting and other regulatory requirements for the securities dealers who are parties to retail repurchase agreements.
Towards the end of November this year, the Financial Services Commission indicated that it was making progress on the technical details and administrative framework of the new retail repo transaction structure, which is intended to reduce risk to securities dealers.
The repo market is currently valued at about $418 billion, up from $394 billion a year ago.
Completion of the sixth review of Jamaica's economic performance under the four-year programme enabled an immediate purchase of an amount equivalent to SDR 45.95 million (about US$67 million).