Jamaica passes third IMF test
McPherse Thompson, Assistant Business Editor
The International Monetary Fund (IMF) has confirmed that Jamaica has passed the third test under its economic support programme, which enables the country to benefit from a disbursement of US$71.4 million.
The executive board, which completed the third review under the four-year extended fund facility yesterday, hinted that the Jamaican Government was expected to maintain its tight rein on expenditure during the next fiscal year as it did in the first few months of the programme.
Completion of the review enables the disbursement of an amount equivalent to SDR 45.9 million, which would bring total disbursements under the arrangement to the equivalent of SDR 222.6 million or about US$345.8 million, the IMF said in a release.
Ja's programme strong
Nayouki Shinohara, deputy managing director and acting chair of the board, said "Jamaica's programme implementation under the extended fund facility has remained strong. The current account has improved markedly and international reserves have increased in line with programme requirements."
He added that execution of the 2013/2014 budget has remained broadly on track. "However, the economic recovery is fragile. Sustaining the reform momentum and continued implementation of sound macroeconomic policies is necessary to address the persisting challenges and risks," Shinohara said.
The IMF deputy managing director said, "The recent improvement in competitiveness and the steadfast implementation of the macroeconomic programme were expected to spur investor confidence."
However, he said private investment needs to be supported also by determined actions to reduce red tape and bureaucracy, while the strengthening of social protection programmes should help make growth more inclusive.
He commended the Government's plan to restrain expenditure and to meet the 2013/14 budget targets.
Going forward, he said, policies should rely more on curtailing current spending, while protecting capital spending, noting that in the event of a revenue shortfall, additional contingency measures would be needed.
Shinohara said strengthening fiscal management, including an effective fiscal rule, would help entrench fiscal discipline and commitment to debt reduction.
"While important progress has been made to improve the tax system, revenue administration, public sector modernisation, and public financial management, reforms should remain a priority," he said.
Shinohara added that "monetary policy should continue to focus on reducing inflation and rebuilding net international reserves. In addition, it will be important to remain vigilant to market conditions to avoid liquidity constraints."