KINGSTON, Jamaica (CMC) – Jamaica is in line to receive US$40 million from the International Monetary Fund (IMF) after a delegation from the Washington-based financial institution ended a two week visit to the island on Friday.

The delegation, headed by Uma Ramakrishnan, was conducting the ninth review of Jamaica’s IMF-supported programme under the Extended Fund Facility (EFF).

In 2013, Jamaica entered into a four year US$948.1 million EFF agreement with the IMF and the delegation is expected to determine whether Jamaica met all quantitative targets and structural benchmarks for the review period.

The review follows the announcement that the island’s net international reserves (NIS) stood at US$2.4 billion at the end of July.

Ramakrishnan said the delegation reached preliminary agreement with the authorities on a package of policies that aims at completing the ninth review under the EFF.

She said that consideration by the IMF’s Executive Board is tentatively scheduled for September and that upon approval, Jamaica would be able to receive US$40 million.

“A gradual economic recovery is underway. The growth outlook is improving, although the drought is hampering agricultural recovery for the second year in a row. Growth is now projected at 1.4 per cent in 2015-16.

“The unemployment rate declined to 13.2 per cent in April, with strong employment growth in tourism and in the business process outsourcing (BPO) sector. Inflation remained at a historic low of four per cent  in July, in spite of higher food prices on account of the drought. International reserves have continued to increase, standing at US$2.4 billion at end-July.”

Ramakrishnan said programme implementation remains strong and that all quantitative performance targets through end-June were met, with tax revenues exceeding expectations. Structural reforms are also broadly on track.

“The recent PetroCaribe liability management operation is an important step in reducing Jamaica’s public debt.’

She said the buyback has immediately reduced the debt-to-gross domestic product (GDP) ratio by about 10 per cent of GDP, and the Net Present Value (NPV) gain of the transaction is estimated at about US$300 million.

She said this proactive operation will help keep public debt on a clear downward trajectory, with debt-to-GDP now projected at 125 per cent by the end of this fiscal year.

“We welcome the recent wage agreement between the Government of Jamaica and the Jamaica Confederation of Trade Unions (JCTU). Improving the efficiency, quality and cost effectiveness of the public sector is critical for higher growth.

“Lowering the wage-to-GDP ratio to the 9 percent target for 2016/17 will create fiscal space for capital spending, which will help the government invest in long-term priorities.”

The IMF official said continued strong implementation of the government’s growth strategy is essential to support job creation and boost the economy.

“We welcome the steps taken by the Electricity Sector Enterprise Team to lock in lower electricity prices by diversifying sources of energy used for electricity generation beyond oil,” she said, adding “there is also scope for further improvements in the business climate.

Ramakrishnan said enhancing access to credit for small and medium-sized enterprises will improve financial inclusion and support private investment.

“Financial sector stability is being strengthened through progress in implementing the Banking Services Act and ongoing reforms in the securities dealers sector. The transition of retail repos to a trust is nearing completion and should make this investment more secure and transparent,” the IMF official said.