Jamaica on target

Passes second IMF Quarterly Test

Saturday, August 28, 2010

JAMAICA has again met the performance targets under the International Monetary Fund's (IMF) Stand-By Arrangement.

Speaking yesterday at a press conference at the Ministry of Finance at Heroes Circle in Kingston, IMF mission chief to Jamaica Dr Trevor Alleyne announced that the end of June performance targets have been met.

"We think the overall pace and direction of the very ambitious structural reform agenda is advancing as scheduled," the IMF official added.

It was the second quarterly performance test for Jamaican since the US$1.27 billion Stand-by Agreement was signed with the Fund in February this year.

An IMF team has been in the island for the past week and a half carrying out a review of the country's performance.

"With respect to the end of June quantitative targets, we have seen that a faster than expected improvement in macro-economic conditions, especially the decline in interest rates and government securities, has had a net positive effect on the overall fiscal deficit situation," said Dr Alleyne.

He noted that very strong general consumption tax (GCT) collections were seen in the first quarter of the fiscal year, reflecting improved tax administration efforts. He also pointed out that the continued "cautious and disciplined" execution of the budget were key to meeting the primary surplus target.

Dr Alleyne explained that the exchange rate has stabilised at an appreciated level, and that the international reserves floor target was exceeded by a very large margin.

"With respect to the structural reform agenda, we have found that the authorities have prepared amendments to strengthen the effectiveness of the fiscal responsibility framework, which is a very key institutional reform to improve public financial management," he said.

Minister of Finance Audley Shaw said he appreciated the fact that the IMF has demonstrated that it has the capacity to be responsive to changing needs.

An example, he said, was the fall-out from the West Kingston operation, which has resulted in an adjustment to certain expenditure in areas that had to be made, which the IMF was well aware of.

Another area that had to be considered was that funds were required to procure parts for CT scanners in two major hospitals, Kingston Public Hospital and Cornwall Regional, which cost approximately US$600,000, or about $50 million.

The minister said, too, that an additional $60 million has to be set aside, immediately, for the Ministry of Health's vector control programme.

"Here again, the IMF fully understands those kinds of emergency expenditures, and we have to make room in terms of our primary balance targets to accommodate that," Shaw said.

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