News and Updates | Economic Programme Oversight Committee (EPOC)

Briefing | Jamaica’s Macroeconomic Outlook For 2017-2018

HOW IS THE ECONOMY?

Jamaica’s macroeconomic indications have remained robust over the last nine months, displaying no overshooting or undershooting in response to global geopolitical and/or geo-economics occurrences. Prices (inflation) have remained stable on the books.
The exchange rate has depreciated by less than one per cent since the start of year, moving from $128.55 to $129.6 per US dollar. The Bank of Jamaica has indicated that from an assessment of preliminary Balance of Payments data, Jamaica’s current account recorded a deficit of US$29.8 million for the June 2016 quarter, an improvement of US$98.7 million relative to the corresponding period in 2015.
The improved estimate is because of a reduction in the value of what Jamaica purchases from the rest of the world and an improvement in the amount of services Jamaica sell to the rest of the world throughout that period. This they believe will continue trending downwards, given that there is more alignment between the Jamaican dollar and its major international trading partners, namely the US, Pound, Yuan and Canadian.

WHAT IS THE INTERNATIONAL PERCEPTION?

According to the World Bank: “The reform programme being implemented in Jamaica is beginning to bear fruit: Institutional reforms and measures to improve the investment climate have started to restore confidence in the Jamaican economy. The country’s credit rating has improved, and Jamaican bonds trade at a premium in international markets. Continued prudent macroeconomic policies and careful liability management reduced total government debt to 122 per cent of gross domestic product (GDP) by the end of 2016.”

WHAT ABOUT GDP GROWTH FORECAST?

The World Bank has estimated that the Jamaica economy grew by 1.7 per cent for the calendar year 2016 and forecasts two per cent growth for 2017, assisted by improved economic conditions in the United States, low oil prices, and investment reforms.
The Planning Institute of Jamaica (PIOJ) has indicated that the Jamaican economy recorded real GDP growth of 0.7 per cent per annum for the FY2013/14 and the FY 2015/16, the regular average for the country over the last 50 years.
According to the PIOJ, improved economic growth in the nation hinges on:
1. Continued implementation of Economic Reform Programme. “Since end March 2016, all Benchmarks and Quantitative Performance Targets have been met and economy on track to meet all targets.”
2. Implementation of additional legislative and regulatory reforms; over 50 legislative and regulatory reforms including tax incentives, credit bureaux, collateral registry, omnibus banking legislation have already been implemented.

WHAT ABOUT POVERTY AND UNEMPLOYMENT?

The latest unemployment statistics, according to the Statistical Institute of Jamaica, shows that the unemployment rate is approximately 13 per cent. Youth unemployment remains considerably higher for the youth, which is more than 28 per cent.
As it relates to poverty, the latest official estimates show that poverty headcount fell from 25 per cent in 2013 to 20 per cent in 2014. No recent poverty data is available to my knowledge.

WHAT IS THE CURRENT POSITION WITH THE IMF?

Recall that the Government of Jamaica holds a loan on standby arrangement with the International Monetary Fund (IMF) as of November 2016. This is precautionary against unforeseen shocks that require foreign currency remedy.
The IMF conducted an interview with Nigel Clarke, Jamaica’s ambassador of economic affairs and deputy chair of the Economic Growth Council. Dr Clarke spoke about the nation’s priorities and new initiatives, the role of multilateral institutions in supporting economic reforms, and policies under way to raise growth, create jobs, and achieve better social outcomes.
Read the full Question & Answer at https://www.imf.org/en/News/Articles/2017/05/09/na051017-jamaicas-econom…

WHAT ARE YOUR MAIN ECONOMIC PRIORITIES AS AMBASSADOR OF ECONOMIC AFFAIRS FOR JAMAICA?

Our ambassador outlined that the nation’s key economic priorities are to maintain economic stability and supporting growth. He explained that, “It is important for Jamaica to continue implementation of the structural reforms required to entrench macroeconomic stability and fiscal sustainability while, at the same time, ensuring that economic expansion is given all possible support.”

WHAT MORE CAN JAMAICA DO TO SUPPORT JOB CREATION?

According to Dr Clarke, agriculture and business process outsourcing are the two main industries currently poised to absorb the most jobs in the Jamaican economy.
He said, “In the agricultural sector, the two key impediments are access to reliable water and a lack of strong linkages with the tourism sector.
To ensure that agriculture can grow sustainably, employing more Jamaicans, we will need to invest in water storage and distribution systems, and irrigation. But the Government doesn’t have the capacity to do this on its own, and will need to partner with the private sector.”
The agriculture sector absorbs 20 percent of the working force of the island; however, it contributes five per cent GDP. Therefore, with the emergence of Cannabis Indices globally, Jamaica can see this as a perfect opportunity for a greater and sustainable input into the economy coming from the agriculture sector.
Overall now more than ever, Jamaica is in the best position to maintain stability, increase growth and continue gradually improving infrastructure and social services necessary to transform into a developed nation.

Source: The Gleaner

Get to know the 3 oversight committees that monitor the PSBA

The Government of Jamaica (GOJ), shortly after signing the Precautionary Standby Arrangement (PSBA) with the International Monetary Fund, announced that there would be a tripartite monitoring mechanism will oversee the agreement.
The three oversight bodies that monitor the structural benchmarks and other commitments under the PSBA are the Public Sector Transformation Oversight Committee (PSTOC), Economic Growth Council (EGC) and Economic Programme Oversight Committee (EPOC).
The EGC and PSTOC were created in 2016 to join the three-year-old
These three committees provide important oversight to ensure that the Jamaican economy progresses.
EPOC in monitoring and reporting on macroeconomic imperatives, Jamaica’s economic and financial policies and strategies.
PSTOC monitors implementation of the public sector transformation, public bodies, public service reform and the social safety net.
The EGC tracks measures specific to growth policies, which include some of the EGC’s recommendations that have been accepted, as set out in the Memorandum of Economic and Financial Policies (MEFP) as agreed with the IMF, as well as the monitoring of growth outcomes.
EPOC monitors implementation of the fiscal, monetary and quantitative performance targets as set out under the MEFP. The measures that EPOC monitors are related to tax policy, tax administration, customs administration, public financial management and debt management.
The three bodies report their findings on the macroeconomic performance of Jamaica’s economy through press briefings, social media and advertisements.

On The Corner > ‘Talk To Us’ – Swallowfield Residents

They might live in a constituency which has voted People’s National Party since 1989 but the politics will not stop the people of Swallowfield from working with the Jamaica Labour Party to improve their community, but they have one demand – “talk to us”.
That was the message the mostly women from the South East St Andrew community delivered to co-chairman of the Economic Programme Oversight Committee (EPOC), Keith Duncan, when he went ‘On the Corner’ at Annie’s Bar last Thursday.
Duncan was continuing the EPOC scheme of taking details of its work to residents on street corners across the island, and while most of the men listened from a distance the women came prepared to do more than listen.
Well into his presentation of the Government’s economic programme, which has been accepted by the International Monetary Fund, and EPOC’s role of monitoring the implementation of the programme, Duncan pointed to the plan to reform inner-city communities to ensure their sustainable development when he was interrupted with a slew of questions.
“The plan, the measures to reform the inner city and to create amicable places for working and living and all of that, and you said this is a plan for Jamaica. My question is, the places that they are planning to develop, where is the consultation with the people?” said Pamela Munroe.
“This is to be submitted by October 2017. I don’t see anybody consulting with the people. How can you have a plan to impact people like this and there is no consultation?” added Munroe.

CONSULTATION NECESSARY
She argued that consultation with residents of these communities is of absolute necessity, because what was written in books or on papers was not necessarily what residents there wanted.
“There can be no one-size fix for all communities,” declared Munroe, as she argued that while some inner-city communities may require urgent infrastructure development as their first phase, for others it may be other types of development, such as employment for residents.
“So what is written down is not necessarily what people want. I don’t understand how they are going to write something on behalf of us when they don’t know our situation,” declared Munroe.
As Duncan pulled out the document to share the specific details of the programme, Audria Osborne demanded to know how the Government arrived at the proposed plan, as she argued that development recommendations cannot be made behind the backs of the residents.
“You can’t have these kinds of wide-scale development plan without hearing the people’s voices,” argued Osborne.
“What is it that the community is going to contribute? There has to be a buy-in by the community members or it will end up like the downtown (Kingston) bus shed that they spend millions to build and is not being used,” added Osborne.
Duncan was quick to agree with the need for consultation as he noted that this was one reason why EPOC is going to communities.
“You are saying there should be consultation with the people. That’s why we have an ‘On the Corner’ … because the people say they want to be heard, they want to be part of the decision-making process, and that is a good thing,” said Duncan.
[Source: The Jamaica Gleaner]

EPOC proposes analysis of tax revenue performance

KINGSTON, Jamaica (JIS) — Economic Programme Oversight Committee (EPOC) Co-Chairman, Keith Duncan, is proposing that the Government analyse the over-performance in tax revenue inflows recorded for the 2016/17 fiscal year to determine the underlying factors driving this outcome.This, he said, should be done to ensure that this outturn can be sustained over the long term. He posited the suggestion while addressing journalists during EPOC’s quarterly media briefing at the Jamaica Money Market Brokers (JMMB) Group’s head office in New Kingston on Friday, May 19.
Tax revenue inflows last year totalled $458.3 billion to surpass the $440 billion target. This enabled the administration to generate a primary balance surplus of $135.9 billion.
This was $12.9 billion or 7.7 per cent above the minimum seven per cent target of $123 billion for the period, in keeping with target stipulations under the International Monetary Fund’s precautionary three-year Stand By Agreement (SBA).
Additionally, non-borrowed reserves totalled $1.93 billion, to surpass the target of $1.47 billion.
These, along with containment of the rate of inflation, which came in at 4.1 per cent to be within the target range of two to nine per cent, and further reduction in the unemployment rate, which declined by 0.6 per cent to 12.7 per cent in January relative to the corresponding period in 2016, were among the key fiscal and monetary quantitative performance criteria for 2016/17 under the Government’s IMF-supported economic reform programme.
“So Jamaica, from a quantitative perspective, is performing significantly well; the selected fiscal and monetary indicators have been met and surpassed in a significant way. The tax revenue intakes continue to be strong, where the over-performance was driven by improved compliance, higher levels of company profits, and an increased country wage bill reflective of higher levels of employment,” the EPOC Chairman stated.
Duncan said the buoyant revenue inflows were “not surprising”, given recent fiscal developments. These, he noted, include: the shift from direct to indirect taxation; increased macroeconomic stability and economic growth; and increased company profits. He, however, believes there may be other underlying factors.
In this regard, Duncan emphasised that “there needs to be further and deeper analysis done by the Ministry of Finance around these numbers so we really can get to the underlying reasons for the movement and buoyancy (so that), hopefully, this (can) be sustained.”
“We really need to get the handle on it, because we would like to ensure that there is some sustainability to this because this would help us to create room in our fiscal space, going forward,” he added.

EPOC supports gov’t’s management of public bodies surpluses

KINGSTON, Jamaica (JIS) — The Economic Programme Oversight Committee (EPOC) is supporting the proposed reintegration of public bodies generating significant financial surpluses into central Government.The move, which is slated to commence in July with three entities, is among nine new public sector transformation structural benchmarks contained in the revised Memorandum of Economic and Financial Policies underpinning the administration’s precautionary Stand By Agreement (SBA) with the International Monetary Fund (IMF).
The initial shortlisted entities are the Tourism Enhancement Fund (TEF); Culture, Health, Arts, Sports and Education (CHASE) Fund; and Jamaica Civil Aviation Authority (JCAA).
Co-Chairman of EPOC, Keith Duncan, says it “makes a lot of sense” to reintegrate the entities, reroute their revenues into the Consolidated Fund and provide them with budgeted allocations for their operations.
“It makes no sense for us to be carrying cash surpluses in so many entities and the Government (has to be) borrowing funds (from) other entities. So the move to integrate these public bodies where applicable or suitable is welcomed by the EPOC,” he added.
He was speaking at EPOC’s quarterly media briefing at the Jamaica Money Market Brokers (JMMB) Group’s head office in New Kingston on Friday.
Meanwhile, Duncan advised that two of the new benchmarks will be monitored by EPOC.
These, he said, are Cabinet submissions for a proposed crisis resolution framework, based on the outcomes of discussions contained in a Consultation Paper, by July 31, 2017; and proposed revision of the Bank of Jamaica (BoJ) Act, in line with IMF recommendations, by August 31, 2017.
Duncan also reiterated the importance of public sector transformation in supporting the Government’s growth agenda.
“The drive to (attaining) an efficient public sector is of primary importance. Getting that wage to Gross Domestic Product (GDP) number down to nine per cent is very important to ensure that we have an efficient allocation of resources,” Duncan underscored.
Meanwhile the EPOC Co-Chairman advised that another benchmark is on course for implementation this month.
This, he indicated, is the institution of mechanisms to ensure full compliance with the provisions of the Securities Retail Repurchase Agreement.
“These regulations require that retail repos be governed by a master retail repurchase agreement that is signed by both the dealer and the client. This is to be completed by May 31 and the Financial Services Commission has indicated that we are on track,” Duncan stated.
[Source: The Jamaica Observer]