News and Updates | Economic Programme Oversight Committee (EPOC)

October 2017: Update on 3-year IMF Precautionary Stand-by Arrangement (PSBA)

The new Precautionary Stand-By Arrangement (PSBA) with the Government of Jamaica (GOJ) was approved by the Executive Board of the International Monetary Fund (IMF) on November 11, 2016. The GOJ met the programme conditions for the IMF PSBA as at end-June 2017*.
The second review mission by the International Monetary Fund (IMF) of the PSBA was conducted over the period September 5-15, 2017. As previously reported by EPOC, based on the preliminary results for performance to date through the end of June 2017, the GOJ has met the targets for the quantitative performance criteria (QPCs) and indicative targets (ITs) for the IMF PSBA as at end-June 2017. The second review under the PSBA was successfully completed by the Executive Board of the IMF on October 23, 2017.
Most recent results: The EPOC met on October 20, 2017, and reviewed the latest available results. Jamaica has met all structural benchmarks under the programme through end-September 2017. Based on the preliminary results for performance through to August 2017, the GOJ is on track to meet the indicative targets for the QPCs and ITs for the IMF PSBA for end-September 2017.
* Based on the results for performance to date through the end of June 2017.

Download Document

EPOC, IMF Endorse Government’s National Financial Inclusion Strategy

0

The Economic Programme Oversight Committee (EPOC) has expressed support for the International Monetary Fund’s (IMF) benchmarks related to the Jamaican Government’s National Financial Inclusion Strategy (NFIS).
Speaking at the Manchester Chamber of Commerce on October 5, EPOC Co-chair Keith Duncan outlined the key pillars of the NFIS. The Strategy is intended to create the conditions through which Jamaicans not currently participating in the formal banking system are able to gain financial security, thus boosting the country’s economic growth.
The key benchmarks of the strategy, Mr Duncan noted, are Financial Access and Usage (for example, increasing the number of Jamaicans with a bank deposit account to 95 percent); Financial Resilience (with 40 percent of Jamaicans saving at regulated financial institutions); Financing for Growth (increasing the value of loans to the MSME and agriculture sectors); and Responsible Financing (higher levels of confidence in the financial system among adults). All these are targeted for the year 2020.

Mr Duncan noted that the IMF benchmarks seek to address several major challenges. These include a reliance on cash (65 percent of workers receive their wages in cash); and financial vulnerability (only 30 percent of Jamaicans save money through a regulated financial institution). Only a small percentage (11 percent) of Jamaicans and 27 percent of small and medium enterprises (SMEs) have access to credit from these institutions. Moreover, distrust of financial institutions (around half of the population) and illiteracy are obstacles to bringing underserved Jamaicans into the formal economy.

In endorsing the Financial Inclusion Strategy, Dr Lonkeng Ngounga, IMF Resident Representative to Jamaica, noted: “Growth cannot be sustained if persons are not included.” Dr Nguounga added: “If the IMF programme is sustained, Jamaica is on track in improving the lives of its people.”

EPOC Co-chair, Keith Duncan, engages with members of the audience following his presentation at the Manchester Chamber Of Commerce on October 5, 2017.
At its launch in March, Finance Minister Audley Shaw described the NFIS as “the Government’s commitment to create the enabling environment that makes it easier for Jamaicans to save, invest, to do business and obtain relevant financial products and information to empower themselves.”

IMF Staff Concludes Visit to Jamaica to Discuss Progress of Economic Program

0

PRESS RELEASE
September 15, 2017

All quantitative performance criteria and structural benchmarks at end-June 2017 were met.
The Jamaican economy is rebounding, despite weather swings.
Concluding public sector wage negotiations and passing the pension bill are urgent for budgetary certainty and fiscal sustainability.

An International Monetary Fund (IMF) staff team led by Uma Ramakrishnan visited Kingston from September 5–15, 2017, to conduct discussions on the second review of Jamaica’s financial and economic program supported by the IMF’s precautionary Stand-By Arrangement (SBA).
At the end of the visit, Ms. Ramakrishnan issued the following statement:
“The IMF team reached a preliminary agreement with the authorities on a set of policies that aims at completing the second review under the SBA. Consideration by the IMF’s Executive Board is tentatively scheduled for October 2017. Upon approval, an additional SDR 126 million (about US$180 million) will be made available for Jamaica, bringing the total accessible credit to about US$790 million. The Jamaican authorities continue to view the SBA as precautionary, and use it as an insurance policy against unforeseen external economic shocks beyond Jamaica’s control.
“Jamaica’s economic program continues to deliver strong results, supporting high confidence and increasing job creation. All quantitative performance criteria and structural benchmarks at end-June 2017 were met. The central government’s primary balance surplus exceeded the program target by a healthy margin, mainly from buoyant corporate income tax. Non-borrowed international reserves also over-performed, and inflation is anchored within the Bank of Jamaica’s target range of 4–6 percent.
“The Jamaican economy is rebounding, despite the impact of weather swings in 2017. Growth has been positive for 9 consecutive quarters, with strong performances especially in tourism, construction, and manufacturing. Unemployment reached 12.2 percent in April 2017, a 7-year low, along with a sustained expansion in the labor force. For FY17/18, economic activity is projected to expand by 1.6 percent, slightly lower than anticipated, as flooding adversely impacted agriculture. Over the medium-term, economic expansion is expected to be around 2½-3 percent, as sustained reforms yield higher investment and productivity dividends.
“There was broad agreement on the need to accelerate the public sector’s wage negotiations; further delays pose significant risks and uncertainty to the government’s fiscal accounts. It was also acknowledged that wage negotiations should be anchored on a forward-looking medium-term compensation framework to sustainably reduce the wage bill and release resources for the much needed social and growth-enhancing spending. Going forward, it is important to rethink the extensive and inequitable system of allowances and the overall pay structure in the public sector.
“More fundamentally, reforms to a large and inefficient public sector cannot be delayed any further. Achieving greater efficiency requires a scale back of the roles, responsibilities, and overall size of the public sector. Strengthening the procurement process would also ensure a timely execution of capital projects.
“There was broad consensus on anchoring monetary policy on price stability, with a flexible and market-determined exchange rate. In this regard, the team commends the BOJ for the successful introduction of the BOJ Foreign Exchange Intervention and Trading Tool (B-FXITT) in June, creating a transparent and market-based exchange rate price discovery mechanism. Going forward, the BOJ intends to limit FX interventions to smoothing volatility and countering disorderly FX market conditions. Ongoing improvements in the monetary policy toolkit and introducing FX buy auctions to build reserves, combined with clarity in the BOJ’s policy and communication, will improve liquidity management and policy signaling.
“Major institutional reforms in the financial sector are underway. In addition to the resolution regime for financial institutions, revisions to the BOJ Act are under consideration to crystalize the central bank’s mandate around price stability, along with a governance framework and balance sheet strength that support that mandate.”
“The IMF team met with Prime Minister Andrew Holness, Finance Minister Audley Shaw, Bank of Jamaica Governor Brian Wynter, State Minister Fayval Williams, State Minister Rudyard Spencer, Ambassador Nigel Clarke, Acting Financial Secretary Darlene Morrison, Planning Institute Director General, Wayne Henry, senior government officials, as well as members of the private sector, labor unions and civil society. The team would like to thank the Jamaican authorities for their hospitality and collaboration.”

IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: ANDREW KANYEGIRIRE
PHONE: +1 202 623-7100 EMAIL: [email protected]

EPOC Optimistic That Jamaica Is on Track for a Positive IMF Review

0

Following its meeting on September 7, the Economic Programme Oversight Committee (EPOC) is reporting a favourable performance under the Precautionary Standby Arrangement (PBSA) with the International Monetary Fund (IMF) up to the end of July 2017.
IMF June Review
The IMF is now in Jamaica conducting the June review, their second review under the PBSA which was initiated in November 2016.
Structural Benchmarks
The Government of Jamaica (GOJ) has met all the macro fiscal structural Benchmarks and the (9) structural benchmarks for public sector transformation, public bodies and public service reform through the end of August 2017.
Structural benchmarks are key initiatives that the GOJ should complete by established deadlines under the PSBA.
Fiscal Performance Highlights
Tax Revenues were J$153.6 billion which exceeded the budgeted target of J$148.2 billion by J$5.5 billion for the period April to July 2017.
EPOC’s September Communiqué notes Recurrent Expenditure was below the budgeted spend as of the end of July, falling below budget by J$6 billion for the first four months of the fiscal year. Capital expenditure was behind the budget target by J$800 million. These numbers are primarily driven by the timing of expenditures, EPOC notes, adding that it will continue to monitor these important indicators.
As a result of the Revenues and Expenditure reports, EPOC points to the Government’s Primary Surplus of J$30.6 billion for the June review. This is J$15.6 billion ahead of the J$15 billion target agreed with the IMF. Moreover, the Primary Surplus increased to J$38.56 billion at the end of July – $9.5 billion ahead of the Government’s target of $29 billion.
International Reserves
The Non-Borrowed International Reserves at the end of June was US$ 1.82 billion against the programme target of US$ 1.52 billion.
As at the end of July, the Non-Borrowed Reserves increased to US$ 2.026 billion.
Inflation
At the end of June, inflation stood at 4.4 percent, well within the programme target range.
Conclusion
“We are comfortable based on the information available to us that the second IMF review should be successful,” says EPOC’s Co-Chair Keith Duncan. “We also wish to acknowledge the efforts of stakeholders in keeping Jamaica on track on its achievements to date in its Economic Programme. This is Jamaica’s programme.”
EPOC Co-Chairman Keith Duncan shares a photo highlight of the EPOC On The Corner series with members of the press at a media briefing on Wednesday, September 6 at the JMMB offices.

September 2017: Update on 3-year IMF Precautionary Stand-by Arrangement (PSBA)

0

The new Precautionary Stand-By Arrangement (PSBA) with the Government of Jamaica (GOJ) was approved by the Executive Board of the International Monetary Fund (IMF) on November 11, 2016. The GOJ has met the programme conditions for the IMF PSBA as at end-June 2017*.
The EPOC met on September 5, 2017, and reviewed the latest available results. Jamaica has met all structural benchmarks under the programme through end-August 2017. Based on the preliminary results for performance to date, the GOJ is on track to meet the targets for the QPCs and ITs for the IMF PSBA for end-June 2017.
* Based on the results for performance to date through the end of June 2017.

Download Document