Higher United States growth means more remittances, tourists – van Selm
Jamaica is expected to benefit from more remittances and higher tourist arrivals because of the higher growth expected in the United States this year, according to Dr Bert van Selm, Resident Representative of the International Monetary Fund (IMF).
The IMF official said lower oil prices on the international market, as well as lower inflation which is contributing to a narrowing of the current account deficit to under seven per cent of gross domestic product this fiscal year, have positive implications for Jamaica, in that it should lead to higher growth.
“Prospects are looking up. Everything points to higher economic growth in 2015 relative to earlier years,” van Selm told participants of two-day workshop organised by the Institute of Chartered Accountants of Jamaica in Kingston on Friday.
Referring to Jamaica’s four-year economic support programme with the IMF, the van Selm reiterated what other IMF officials have been saying that “Government needs to stay the course. They made an excellent start at reforming the Jamaican economy over the past two years, but we are nowhere near the finish line. This is a marathon not a sprint so we need to stay the course.”
He added that the public as well as the international community need to support the Government in their quest to implement the reforms to which it has committed under the programme.
Noting that global growth was picking up, van Selm said higher growth was expected in the US this year. “Jamaica is an open economy which is very close to the United States and that depends to a large extent on tourism. Higher US growth means more remittances and more tourists,” he said.
On the fiscal accounts, van Selm said “the picture is a little more ambiguous” in that, to the extent that prices are lower because of a decrease in the rate of inflation, it means government revenues from excise and ad valorem taxes will be lower.
“This also affect the expenditure side given that ministries, departments and agencies use fuel and electricity in one way or another so their bills will also be lower,” he said.
Referring to various elements of tax reform being undertaken by the government as part of the economic support programme, van Selm noted that they were not meant to give the government an opportunity to collect more revenue. Rather, the tax reforms should be revenue neutral, allowing the government to receive the same amount of money despite changes in tax laws.
Speaking at the same function, ICAJ president Dennis Chung noted that an important part of van Selm’s job as resident representative is to keep track of economic developments to ensure that the IMF programme is achieving its goals.
“And of course, the main goal of the programme is to create the conditions for sustained growth through significant improvements in Jamaica’s fiscal and debt positions as well as in competitiveness,” said Chung.
He said the use of international financial reporting standards, the focus of the two-day workshop, was "crucial to this process of fostering an environment for growth" and that high-quality financial information increases comparability, credibility, transparency and, as a result, stability.
“It enhances the effective management of public resources and fosters confidence in the markets of emerging nations,” said Chung, who is also chief executive officer of the Private Sector Organisation of Jamaica.