Jamaica faces five more tests under IMF programme
Jamaica has five quarterly reviews of the 15 tests remaining under the economic support programme with the International Monetary Fund (IMF), which it must pass to successfully complete the four-year agreement inked in May 2013.
The eleventh review of the December 2015 quarter's performance criteria was slated for March 15, but could be done later given that the IMF team, which was due in Jamaica in February to undertake the assessment, had been awaiting the holding on the general election before doing so.
IMF resident representative Dr Bert van Selm has said the mission would resume once the new administration is in place. The election resulted in a change of administration, which means that the IMF will deal with a different finance minister but, if the appointment happens as expected, one with whom they are familiar - Audley Shaw.
Still, as co-chairman of the Economic Programme Oversight Committee, Richard Byles, pointed out last week, Jamaica surpassed key fiscal and monetary indicators, including the primary surplus and net international reserves (NIR) targets for the quarter and should pass the eleventh test.
Despite the delay in conducting that review, Byles said the IMF staff assessed the performance under the programme to be on track. Van Selm also said Jamaica's performance under the Extended Fund Facility is on track.
According to the schedule in the December 2015 IMF country report on Jamaica, the twelfth review of the March 2016 quarter is scheduled for June 15, when the country is required to meet a primary surplus target of $11 billion, according to the quantitative performance criteria.
The thirteenth review of the June 2016 quarter, scheduled for September 15, requires Jamaica to have a primary surplus of $33 billion, rising to $58 billion by the fourteenth review of the September 2016 quarter on December 15.
The fifteenth and final review of December 2016 performance requires Jamaica to have a primary surplus of $126 billion. That test is scheduled for March 15, 2017.
The dollar figures for the primary surplus for the remaining reviews are based on calculation of seven per cent of gross domestic product.
Apart from periodic perform-ance criteria, IMF conditions also include continuous perform-ance criteria. The continuous benchmarks include assurance that there is no financing of Clarendon Alumina Production (CAP) by the Government or any public body, including Petro-Caribe, as well as no new Government guarantee for CAP or use of public assets - other than shares in CAP and assets owned by CAP - as collateral for third-party financing of CAP, both conditions of which have so far been met.
Another continuous benchmark involves capping the total loan value of all new user-funded public-private partnerships at three per cent of GDP on a cumulative basis over the period of the four-year programme - a benchmark that also has so far been met.
The Government was also required to implement a Cabinet decision stipulating the immediate cessation of granting of discretionary waivers as stipulated in the technical memorandum of understanding.
Jamaica has met most of the 35 benchmarks on institutional fiscal reforms, tax and tax administration reforms, financial sector and growth-enhancing structural reforms it has so far been tasked under the IMF programme.
Within the next four months, by June 30, a new policy that will ensure consistent public financial management rules for public bodies is to be developed and submitted to Cabinet for approval.
The Jamaican Government had proposed that by March 31, 2016 it would increase the capacity of the post-clearance audit unit in the Jamaica Customs Agency through the hiring of 15 more auditors.
The quantitative performance criteria also require the Government to meet specific fiscal targets on tax revenue, the overall balance of the public sector, central government direct and guaranteed debt, central government accumulation of domestic arrears and tax refund arrears, consolidated Government accumulation of external debt payments, as well as maintain a floor on social spending.
Monetary targets include maintaining a floor on the cumulative change in the NIR and a ceiling on the cumulative change in net domestic assets from the end of December 2014 until the end of the programme.
The last review of Jamaica's economic performance estimated that the public debt would close the fiscal year ending March 2016 at 125.1 per cent of GDP, and would fall further to 121 per cent at year ending March 2017, when the four-year EFF wraps up. Five years after that, Jamaica's debt ratio is expected to fall to 91 per cent of GP.