The International Monetary Fund (IMF) board has completed Jamaica’s eleventh and twelfth reviews under the Extended Fund Facility (EEF) and has approved US$80 million disbursement.
The review, which was completed on June 17, 2016, enabled the disbursement of additional funds, bringing the total disbursements under the arrangement to US$748.2 million.
The executive board approved the EFF arrangement for four years and a total of about US$948.1 million — the equivalent of 225 per cent of Jamaica’s quota in the IMF at the time of approval of the arrangement on May 1, 2013.
Following the executive board’s discussion yesterday, Mitsuhiro Furusawa, deputy managing director and acting chair, issued the following statement:
“Jamaica’s economic reform programme supported by the fund’s Extended Fund Facility has made major strides in restoring macroeconomic stability, pursuing fiscal consolidation, reducing public debt and undertaking significant tax policy reforms, building financial sector resilience, and tackling structural issues.
“Business confidence is at an all time high, while inflation and the current account deficit have been significantly reduced. The domestic bond market has reopened after the 2013 debt exchange, and private credit growth is recovering.
Furusawa said the new administration, led by Prime Minister Andrew Holness, is committed to continued fiscal discipline.
“The phased personal income tax reform launched with the FY2016/17 budget is a bold step to shift the tax system from direct to indirect taxation. Proper execution of this reform is critical to ensure revenue neutrality and safeguard the revenue base. Strengthening and better targeting conditional cash transfers will help mitigate the impact of the reform on the low-income population.
“Concrete reforms are needed to sustainably reduce the government wage bill, which continues to crowd out priority social and infrastructure spending. Actions should be expedited to divest and outsource certain government services and implement the human resource management system,” Furusawa said.
The deputy managing director and acting chair also said Jamaica’s growth remains weak and unemployment, while declining, is still high. “Further structural reforms to boost growth and employment should focus on facilitating private sector development by expanding financial access and reducing financing cost, lowering energy cost, maintaining external competitiveness, reducing tax compliance costs, and improving public sector resource allocation.”