WITH credit to the private sector moving slower than programmed, the Bank of Jamaica (BOJ) is in discussions with the banking sector to develop solutions to increase the volume of lending.

The slowdown in lending was cause for concern for the Economic Programme Oversight Committee (EPOC), which monitors Jamaica’s Extended Fund Facility (EFF) under the International Monetary Fund (IMF).

EPOC said it encourages both the BOJ and the banking industry to move quickly on the issue in the context of the liquidity constraints as well as the weak but improving demand in the economy.

At the same time, there are challenges with the levels of liquidity in the financial system, as seen by the upward movement in the market- determined Jamaican dollar interest rates, despite the introduction of liquidity facilities by the central bank.

A confluence of factors has led to limited trading of local Jamaican dollar bonds — the introduction of the Central Treasury Management System (CTMS); fiscal consolidation and BOJ open market operation.

For the nine-month period ended December 2013, the Government’s primary balance (the difference between its revenue and non-debt expenditure) was recorded at $61.7 billion, just marginally ahead of the target of $61.6 billion. At end-December 2013, the Net International Reserves (NIR) stood at US$1,056.7 million, considerably ahead of the target of US$836.7 million.

Jamaica has met the two most important quantitative targets for the IMF programme for the third quarter, EPOC noted.

Still, the committee, chaired by Richard Byles, is concerned about the underperformance of tax revenues.

The collection of taxes continues to lag behind the budget forecast of $255.1 billion but exceeded the IMF target by $10 million for the April to December period.

Specifically, there were shortfalls in pay-as-you-earn (PAYE) by $2.7 billion, taxes on dividends by $1 billion and taxes on international trade of $5.75 billion, EPOC reported in its ninth communiqué.

But at least one economist reckons that there should be no cause for concern.

“Revenue should grow next fiscal year, all things being equal,” said John Jackson.

To compensate for the overall shortage of revenue, the government has restrained recurrent expenditure by $7 billion and capital expenditure by $9.1 billion.

“While this is laudable fiscal management, it is concerning to the EPOC, especially since the quarter ending March 2014 is the period when an increase in the primary balance of nearly $50 billion will be required to meet the target of $111.5 billion,” the communiqué said.

EPOC added: “The financial secretary has assured EPOC that measures put in place in November 2013 are beginning to produce positive results as evidenced by preliminary tax collection numbers for January 2014 from the Tax Administration of Jamaica (TAJ) and Jamaica Customs.