Jamaica on track for December indicative targets - EPOC
The Economic Programme Oversight Committee (EPOC), after meeting on December 11 to review the latest available data on the performance of the economy, has indicated that based on preliminary results for performance at end-October 2017, Jamaica is on track to meet the December 2017 quantitative and indicative targets under the Precautionary Standby Arrangement (PSBA) with the International Monetary Fund.
The following are the fiscal performance highlights.
TAX REVENUES & GRANT
Fiscal year-to-date tax revenues at end-October 2017 were at $271.9 billion, which exceeded the budgeted target of $260.3 billion.
The Ministry of Finance and the Public Service (MOFPS), notes, however, that for the month of October 2017, revenues and grants were behind Budget by $2.9 billion. This significant shortfall relates to expected flows programmed in the Budget that were to come in from the three public entities that were incorporated into the Budget. These flows are expected to come into the Consolidated Fund at a later date.
Expenditure for the first seven months of the fiscal year (April-October) was $7.2 billion below the Government of Jamaica Budget (-2.2 per cent). Of this amount, recurrent expenditure was $7.0 billion below budget, while capital expenditure was $0.2 billion below budget (-0.7 per cent).
As a result of the revenue and grants performance and the underexpenditure for the first seven months of the fiscal year, the primary balance of $65.5 billion exceeded the $48.7 billion budget target for April-October 2017.
The non-borrowed international reserves at the end of October was US$2.38 billion against the programme target of US$1.78 billion for end December 2017. The Bank of Jamaica anticipates that this positive performance will continue through the end of December 2017.
The fiscal year-to-date inflation was recorded at 4.7 per cent, within the Bank of Jamaica's target of 4.0 per cent to 6.0 per cent.
The 2017-2018 first supplementary Budget was tabled on December 5, 2017, and shows a total revised estimates of $805.5 billion, compared with the original approved estimates of $715.6 billion. The revised expenditures were calibrated within the fiscal space afforded by the revised estimates for revenues and grants, which generates a primary balance of $132.3 billion. Accordingly, the primary balance requirement of seven per cent of GDP is satisfied by this revised profile for the fiscal operations.
Outlook and conclusion
Jamaica continues to meet its macro fiscal targets. Inflation at 4.7 per cent is stable and within the targeted range. Interest rates are trending downwards and non-borrowed reserves of US$2,377 million remain strong and will exceed the December programme target. Tax revenues continue to be buoyant, which has given the Government of Jamaica (GOJ) the opportunity to table a supplemental budget, increasing spending in the key areas such as national security, infrastructure, and tourism. The Planning Institute of Jamaica projects growth to be in the range of 1.5 per cent - 2.5 per cent for the October to December quarter.
THE CALL FOR A NEW-STYLE EPOC
There have been calls from leaders in civil society and from the media for a stronger independent body to be put in place and possibly entrenched in legislation to provide oversight over Jamaica's Programme for Economic and Social Affairs. EPOC believes that this discussion is an important one to have as Jamaica builds to protect the gains that all have sacrificed for and to ensure the continuity of oversight as we all work for a stronger and resilient economy.
EPOC is committed to continuing in its role of monitoring the macro fiscal programme of the GOJ, ensuring independent reporting on the progress in these areas.
It was also noted that there are ongoing efforts to establish the autonomy of the Bank of Jamaica and to strengthen the capacity of Parliament for fiscal and budgetary analysis. This institutional framework will provide even greater independence and critical review of important monetary and fiscal targets. EPOC will continue to monitor developments in these areas.
EPOC said that it would continue to utilise all existing channels implemented for sharing of information such as monthly report submissions in the print media, quarterly press briefings and interviews, digital engagement via our social media channels and through community-engagement sessions.
PUBLIC SECTOR WAGE NEGOTIATIONS
Further to its recent visit to complete the second review under the International Monetary Fund Programme (IMF), the IMF stated in its Public Release on December 8, 2017, that "delayed public sector wage negotiations pose significant budgetary risks" and apprised the Government of the urgent need to accelerate these negotiations. EPOC supports this position and encourages the Government to quicken the pace to conclude wage negotiations.
EPOC said that it is continuing to monitor plans and imperatives that support the legislated fiscal rule of wages and salaries representing no more than nine per cent of the gross domestic product in the 2018-19 fiscal year.
VALE ROYAL TALKS
EPOC welcomes the announced resumption of the Vale Royal Talks. With crime being such a negative weight on the economy and mental strain on our people, we expect that crime will be a high priority on the agenda.