Grim Days: IMF revises Jamaica's growth forecast to negative
The International Monetary Fund (IMF) announced yesterday that it had revised Jamaica's economic growth target for the current fiscal year to -0.5 per cent.
This comes eight days after the Bank of Jamaica announced that the 0.5 per cent growth rate forecast for the fiscal year had been reduced to 0.1 per cent, mainly because of dislocations caused by Tropical Storm Nicole.
Head of the IMF mission in Jamaica, Trevor Alleyne, agreed the damage caused by Nicole was a factor in its revision, but pointed to other factors such as lower-than-expected growth in some of the country's major trading partners, and the unrest in west Kingston in May.
"This is a worrisome trend, given that unemployment and poverty rates are high," said Alleyne, as he addressed reporters during a joint press conference with Finance Minister Audley Shaw to announce that Jamaica had passed the end-of-September quarterly IMF test.
Almost half a million Jamaicans are living in poverty, 130,000 of whom are not benefiting from the Programme of Advancement Through Health and Education, which is the flagship social safety- net Programme of Advancement Through Health and Education, which is the flagship social safety-net programme of the Government.
The poverty levels rose from 9.9 per cent in 2007 to 16.5 per cent in 2009.
Alleyne said yesterday that Jamaica had met all the end-of-September performance targets under the US$1.2 billion standby loan agreement. He also said several risks related to overspending had emerged. This overspending, he said, dominated discussions between government officials and members of the IMF team that was in Jamaica to conduct the review.
The IMF mission chief said his team agreed that it would be appropriate to relax the primary surplus fiscal target for this fiscal year by 0.3 per cent of GDP, mainly because it recognised that Jamaica had to undertake unbudgeted spending.
Alleyne said the IMF mission had discussed with Jamaica macroeconomic reforms such as tax reforms and other policies that could help spur growth, which would make it easier for people to do business in Jamaica.
This recommendation is subject to the approval of the IMF Board of Directors in Washington, DC.