The Executive Board of the International Monetary Fund (IMF) today completed the third review of Jamaica’s economic performance under a program supported by an Extended Fund Facility (EFF) arrangement. The completion of this review enables the disbursement of an amount equivalent to SDR 45.9 million (about US$71.4 million), which would bring total disbursements under the arrangement to the equivalent of SDR 222.6 million (about US$345.8 million).
The Executive Board approved the EFF arrangement for four years and a total of SDR 615.38 million (about US$948.1 million, the equivalent of 225 percent of Jamaica’s quota in the IMF—see Press Release No. 13/150) on May 1, 2013.
Following the Executive Board’s discussion, Mr. Nayouki Shinohara, Deputy Managing Director and Acting Chair of the Board, said:
“Jamaica’s program implementation under the Extended Fund Facility has remained strong. The current account has improved markedly and international reserves have increased in line with program requirements. The execution of the 2013/14 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.
“The recent improvement in competitiveness and the steadfast implementation of the macroeconomic program are expected to spur investor confidence. However, private investment needs to be supported also by determined actions to reduce red tape and bureaucracy, while the strengthening of social protection programs should help make growth more inclusive.
“The authorities’ plan to restrain expenditure and to meet the 2013/14 budget targets is commendable. Going forward, policies should rely more curtailing current spending,while protecting capital spending. In the event of a revenue shortfall, additional contingency measures will be needed. Strengthening fiscal management, including an effective fiscal rule, will help entrench fiscal discipline and commitment to debt reduction. While important progress has been made to improve the tax system, revenue administration, public sector modernization, and public financial management reforms should remain a priority.
“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. Continued in-depth monitoring of the financial system is also necessary going forward. The ongoing reform of the securities dealers sector should help underpin financial stability.”