A staff mission from the International Monetary Fund (IMF), led by Mission Chief Uma Ramakrishnan, has been in Jamaica since 09 August 2016 to conduct the 13th review of Jamaica’s performance under the Extended Fund Facility (EFF)-supported programme. As is customary, the IMF team met with government officials, technical staff, private sector leaders and other key stakeholders. Discussions focused on the policy priorities and the reform agenda going forward, as well as the post-EFF relationship with the Fund.
Policy implementation under the economic reform programme has remained exceptionally strong since the start of the programme. The economy continues to reflect generally positive trends: Annual inflation is continuing at record lows; the country’s international reserves are rising; the current account deficit of the balance of payments is at a sustainable level and is improving; private sector credit is expanding and the outlook is for strengthened economic recovery in the near to medium-term. Debt remains on a downward trajectory and the recent liability management operation has reduced refinancing risks.
The Government remains strident in its goal to promote equity, efficiency and uniformity in the tax system and, with full support from the IMF, will continue efforts aimed at rebalancing from direct taxation towards more broad-based and growth-inducing indirect tax measures. After successfully implementing Phase I of Personal Income Tax (PIT) reform, Phase II of the announced increase in the PIT threshold is scheduled to be fully implemented, as promised, in FY2017/18, starting April of next year. This will be complemented by comprehensive tax reform which gives due consideration to protecting the most socially vulnerable members of the society.
The GOJ continues to be fully committed to the reform agenda and is escalating efforts aimed at boosting growth and job creation, as well as strengthening the social protection framework, while maintaining a prudent fiscal posture. Near-term priority actions will include initiatives aimed at improving the efficiency, quality and cost-effectiveness of the public sector as well as creating conditions to stimulate increased and sustainable levels of economic growth. The Economic Growth Council, which is vested with the responsibility of advising on and monitoring high impact growth initiatives, will shortly submit to Cabinet its proposal for critical growth initiatives aimed at improving the business climate, reducing crime and violence, promoting infrastructure development, improving access to credit and establishing a Diaspora fund.
Progress has been made on strategic investments aimed at establishing Jamaica as a logistics hub as well as efforts to improve the business climate, including the development of an umbrella financial inclusion strategy and the implementation of a national strategy for the BPO sector. The Government has also established a Trade Facilitation Task Force, which is mandated to ensure that Jamaica has an integral and modern trade and logistics environment.
The IMF Board is scheduled to consider the 13th review under the EFF-supported programme in September 2016. All quantitative performance targets and associated structural benchmarks for the June 2016 quarter have been met. Board approval will allow the release of SDR 28.32 million (about US$40.0 million) to Jamaica.
August 19, 2016
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