Jamaica saves US$400 million on oil importsTuesday, October 13, 2015
BY STEVEN JACKSON Business reporter firstname.lastname@example.org
JAMAICA reduced its oil import bill by over US$400 million ($48 b) for the first six months of the calendar year based on commodity price reductions, according to just-released Bank of Jamaica (BOJ) data.
The savings are less apparent to consumers at the gas pumps due mainly to new taxation. However, it actually resulted in slashing the island's current account deficit to US$44 million for the first six months of 2015.
"This decline was primarily driven by decreases in mineral fuel and food imports of US$403.6 million and US$39.4 million, respectively," stated the Balance of Payments report for June 2015 published this week. Oil prices dropped by nearly half from US$115 to US$63 during the 12 months to June 2015 on the world market.
Between January to June 2015, the island still imported more goods and services at US$3.2 billion than it exported at US$2.1 billion over the period. But the reduction in oil imports aided in narrowing the gap.
"This represented a continued improvement since the corresponding 2011 period. The improved out-turn for the review period emanated from all sub-accounts," stated the report.
It's rare for the island -- a net importer of finished products -- to reduce its current account balance. It's the latest improved indicator for the island on the path to economic recovery.
Between January to March 2015, the island recorded its first current account surplus in a decade at US$39.4 million ($4.6 b), due also to the sustained reductions in oil prices. Between April and June, however, the island recorded a current account deficit of US$85.5 million.
The BOJ explained that the current account represents a summary of economic activities between the residents of a country and the rest of the world during a given period, usually one year.
"The main purpose of keeping these records is to inform government authorities of the overall international economic position of the country, in order to assist them in arriving at decisions on monetary and fiscal policy, on the one hand, and trade and payments policy on the other," stated the BOJ about the accounts, which are divided into current account, capital account, and financial accounts.