Jamaica on target for 11th, 12th IMF tests
Jamaica surpassed the two critical quantitative targets the primary surplus and the net international reserves (NIR) for the December 2015 and March 2016 quarters, paving the way for two expected successful reviews under the economic support programme with the International Monetary Fund (IMF).
The Government achieved a primary surplus of $120.8 billion, exceeding the 7.25 per cent of gross domestic product (GDP) target of $120.7 billion for the fiscal year to March 2016.
At the end of the period, the NIR stood at US$2.42 billion, comfortably surpassing the US$1.54-billion IMF target.
Co-chairman of the Economic Programme Oversight Committee (EPOC), Richard Byles, in releasing the latest communiquÈ on the Government's performance under the programme at a press, conference in New Kingston yesterday, said this means that, in combination with the structural adjustment targets, Jamaica is likely to get the nod from the IMF staff which is currently undertaking the 11th and 12th reviews.
"So that's three years of the IMF programme and we would have passed every quarterly review," said Byles, adding that that was "quite remarkable for a country which was not given much of a chance when we started the programme in 2013".
The EPOC co-chairman said, "I think it speaks to the dedication and the sacrifices that the Jamaican authorities and the Jamaican people have made in this programme."
Tax revenues collected were also on target at $411.9 billion, prompting Byles to note that "the tax authorities seem to be getting quite accurate in their forecasting and delivery".
General consumption tax exceeded the target by $2.2 billion and non-tax revenue, largely comprising interest payment from the PetroCaribe Fund, as well as dividends from public bodies, overperformed by $4.8 billion or almost 16 per cent.
However, the drawdown from grants was $4.1 billion off target and the bauxite levy was $2.7 billion below target.
Telephone call tax and customs duty missed their targets by $1.6 billion and $1.3 billion, respectively.
Byles also presented data from the Statistical Institute of Jamaica which announced a 0.1 per cent decline in inflation for March 2016 following declines of 0.5 per cent and 0.7 per cent for January and February, bringing the calendar year-to-date inflation rate to minus 1.3 per cent.
As in previous months, he said, the recovery in agriculture, consequent on better rainfall over the past few months and continued lower world energy prices moved the index downwards.
COUPLE OF CHALLENGES
The Jamaica Tourist Board also released data showing that for January and February 2016, stopover arrivals increased by 2.9 per cent while cruise ship passengers increased by 25.7 per cent when compared with the same period last year.
Byles said the Estimates of Expenditure and Revenues for fiscal year 2016-17 presented to Parliament by Finance and Public Service Minister Audley Shaw is in conformity with the broad targets of the economic reform programme as set out in the fiscal policy paper.
The primary surplus for 2016-17 has been set at $120.9 billion or seven per cent of GDP, a dollar value slightly above the target for fiscal year 2015-16.
The debt-to-GDP ratio is set to decrease to 120 per cent of GDP at the end of fiscal year 2016-17.
However, the EPOC co-chairman cautioned that there are a couple of challenges of which the country should be aware.
There are a number of important structural targets that need to happen in this, the last year of the four-year programme.
Among them is tax reform which is to begin shortly, said Byles, noting that a specialist team from the IMF will be coming to Jamaica to look at the tax situation and to propose further reforms to the system.
The others are central government pension reform, which is likely to go back to Parliament shortly; public-sector transformation which is attempt to make the civil service leaner, tighter and more efficient; as well as labour reform.
"Those reforms also have to be achieved to pass the IMF tests," he said.
"I think it is generally true to say that confidence is high, so my attitude is positive. I'm quite bullish and I think Jamaica continues to be on the right road, notwithstanding the challenge we have with meeting that gap created by (an increase in) the (income tax) threshold" which will have to be met next fiscal year.