KINGSTON, Jamaica, Thursday November 9, 2017 – The International Monetary Fund (IMF) has given high marks for Jamaica’s performance under the Stand-By Arrangement (SBA) with the Fund, saying “commitment to the economic reform programme remains strong”, with “economic indicators at historical highs, supported by a favourable macroeconomic environment”.
In its recently released 70-page review of Jamaica’s economic performance, the IMF noted that “unemployment is falling, new jobs are being created, and there is robust activity in construction and hotels and restaurants. Inflation and the current account are low, helped by relatively stable oil prices and the Government’s policy efforts”.
The Fund said “the historically low yields” in the recent global bonds reopening reflect “Jamaica’s hard-won credibility”.
“After more than four years of difficult economic reforms, Jamaica’s programme implementation remains exemplary,” the Washington-based multilateral noted.
Giving the second review under Jamaica’s SBA, the IMF said that strong domestic ownership of the reform agenda across two different governments and the broader society has helped to entrench macroeconomic stability and fiscal discipline.
The Fund hailed the “landmark public pension reform bill” passed recently. It said that while there are programme risks, commitment by the Government to the reform programme “remains strong”.
Among the risks identified by the IMF was the challenge of public-sector reform and ongoing public-sector wage negotiations. The Fund said there is need to free up resources through redesigning public-sector wage scales to retain skilled employees and to appropriately reward performance.
“This would pave the way for rebalancing public spending from wages to growth-enhancing outlays on health (where Jamaica’s expenditures are relatively low), education (where an overly large share of expenditures is on wages), security and capital spending,” the IMF said.
It also mentioned weather-related shocks as potential risks to the programme, highlighting growing concern about the issue of climate change.
The international lending agency praised the Government for the fact that “inflation and the current account deficit remain subdued”, and commended the Andrew Holness administration for its divestment programme, observing that “the authorities are accelerating their efforts to divest underutilized public assets and using proceeds towards public debt reduction”.
The IMF cited the Government’s “sustained commitment (to macroeconomic stability and fiscal discipline)” and the ongoing programme monitoring by civil society that has paved the way for the reforms to be “domestically owned, designed and executed”.