The International Monetary Fund (IMF) mission team to Jamaica says that steadfast implementation of the Government’s reform programme will be essential for continued macroeconomic stability, growth and job creation.

In a statement on the visit of the team, which arrived here on February 20 and left on March 3, Mission Chief Uma Ramakrishnan said: “This will require a sustained, multi-year focus on improving public sector efficiency and maintaining the Government’s wage bill on a firm, downward path.

“Next steps include passing the pension Bill and rolling out an early retirement programme, finalising the medium-term compensation policy for government workers, consolidating public bodies and accelerating the introduction of the human resources software.

“Further, enhancing financial sector supervision and crisis preparedness, including through the adoption of a robust crisis resolution framework, are near-term priorities. Increasing the operational autonomy and accountability of the Bank of Jamaica (BOJ) and improving the ways in which it interacts in the currency markets to make those interactions more efficient and more market-based will support the intended transition to an inflation-targeting framework for monetary policy.”

Ramakrishnan also explained that the IMF team reached a preliminary agreement with the Jamaican Government on a set of policies which aims at completing the first review under the new Stand-by Arrangement (SBA) agreed in November 2016, and replaces the EFF which was the agreement under the previous Government.

“Consideration by the IMF’s executive board is tentatively scheduled for April 2017. Upon approval, an additional SDR (Special Drawing Rights) (about US$170 million) will be made available for Jamaica, bringing the total accessible credit to about US$574 million. The Jamaican authorities continue to view the SBA as precautionary, and use it as an insurance policy against unforeseen external economic shocks beyond Jamaica’s control. The SBA is off to a strong start — programme conditions through December were met, with tax revenues and international reserves exceeding expectations; and structural reforms are taking hold,” she said.

“With seven consecutive quarters of positive growth, the Jamaican economy is on track to reach a growth rate of 1.7 per cent in FY2016/17. Growth is projected to continue improving to 2.1 per cent in FY2017/18, bolstered by construction, increased room capacity in the tourism sector, business process outsourcing, and a recovery in mining,” she added.

“The current account deficit is down to about three per cent of GDP, supporting robust growth in non-borrowed reserves, which reached almost US$1.8 billion by end-February. Employment is steadily improving but the unemployment rate remains high at 12.9 per cent, reflecting an expanding labour force.

“The FY17/18 budget tabled in Parliament targets a central government primary surplus of seven per cent of GDP. On the revenue side, the shift from direct to indirect taxes continues with the second phase of the personal income tax (PIT) reform that raises the PIT exemption threshold to $1.5 million. The Government underlined its commitment to supporting this reform with a revenue-neutral tax package that maintains fairness, progressivity and efficiency.