Business

EPOC backs likelihood of 5 in 3

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Sunday, November 19, 2017

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In reporting that Jamaica has continued its strong performance in meeting fiscal criteria and structural benchmarks for end September 2017 under the Precautionary Stand-By Arrangement (PSBA), Keith Duncan on Friday backed statements by Prime Minister Andrew Holness of the country achieving growth target of five per cent in the next three years.

His confidence comes against the background of a downward revision in projections for growth of up to 3.0 per cent for the fiscal year 2017/2018 by the Planning Institute of Jamaica last week. Growth for the fiscal year is now estimated between 2.0 to 2.5 per cent, after the country produced growth of 0.9 per cent for the July to September quarter.

In fact, some of that growth came from diversions of cruise passenger arrivals from hurricane-ravaged Caribbean islands, which resulted in Jamaica recording an increase of 28.5 per cent in passenger arrivals for the quarter ending September 2017.

Growth for the quarter was expected to be driven by the resumption of productive activity at the Alpart alumina plant, but instead the sector recorded a contraction of 8.6 per cent.

“I believe Jamaica can do it; I believe if Jamaicans come on board and make the investments in our economy. I believe we have stability, we have the foundation; and the economy is building the momentum to achieve the 5 in 4 target, I believe it's possible,” Duncan told media representatives during an update on the 3-year IMF Precautionary Stand-By Arrangement JMMB's Haughton Avenue location.

He noted that while it is an “aspirational target” set by the Economic Growth Council, Jamaica must strive to achieve higher levels than the 2.5 per cent target set by the IMF.

More focus, he said, must be placed on what's going right in the country and not on the wrongs, as well as increased effort into social intervention and crime fighting strategies.

Duncan reckons that the Jamaica has become one of the most attractive destinations for investment in the region as continuous effort is placed in keeping the country's fiscal house in order.

“We are modernising the structure within the bank of Jamaica, our monetary policy is predictable and transparent, so Jamaica is open for business,” he said.

The co-chair is adamant that for Jamaica to achieve what is being touted as an ambitious target, more effort must be placed on training individuals as jobs become available in the business process outsourcing sector and the logistics industry.

“I have a degree of confidence that Jamaica is on the right track and I would like to see us hit the target and for the private sector to come on board and make those investments.

“I believe we are keeping the house in order and therefore Jamaica is right for investment. If we stay on track with the programme and we hit on 2019/20 target of 94 per cent debt-to-GDP ratio and we have a stronger economy, we are on the right track,” he said in responding to questions from the Jamaica Observer.

Jamaica's fiscal responsibility Act identifies the prudent level of debt to be at 60 per cent of GDP by 2026. It's anticipated that at that level, resources can be more abundantly allocated according to the needs of the country.

After review of September's fiscal data, EPOC concluded that Jamaica continues to perform favourably against the Government's monthly targets. All seven macro-fiscal structural benchmarks for the November 2016 to September 2017 period have been successfully met, according to EPOC. The Government has also met 11 structural benchmarks for public sector transformation, public bodies and public service reform, through end-September 2017.

Jamaica has a primary balance of $62.3 billion at end September compared to PSBA target of $37 billion. Non-borrowed reserves stood at US$2,377 million above a target of US$1,637 million.

Revenue and grants for the first six months of the fiscal year (April – September) exceeded the budgeted amount of $247.4 billion by 5.9 per cent to total $262.6 billion. Tax revenues of $237.6 billion outperformed the budgeted target by $13.3 billion. The tax categories with the best performances were other companies, up $6.5 billion; special consumption tax, up $5.1 billion; general consumption tax, up $2.6 billion; travel tax, up $2.1 billion; education tax, up $1.08 billion and custom duty, up $1 billion.

Tax on interest which declined $2 billion, was the main underperformer, while import tax and PAYE also underperformed by $1.9 billion and $1.1 billion, respectively. Duncan noted, however, that expenditure for the first six months of the fiscal year (April to September) was $250.3 billion which was $3.2 billion below GOJ target.

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