GOJ Commitments 2019-2021
EPOC welcomes and lauds the GOJ for the delivery of the GOJ Quantitative Performance Targets and Priority Actions Matrix for 2019/20 and 2020/2021; these were outlined at the completion of the sixth review. These commitments will form the basis for the monitoring of the GOJ Economic Reform Programme (ERP) following the expiry of the SBA (IMF Standby Agreement).
As Jamaica forges ahead without the oversight of the IMF, the country’s fiscal performance continues to be strong with healthy Tax Revenues, growing at higher rates than inflation year over year. The GOJ Primary and Fiscal balances continue to exceed targets, keeping Jamaica’s debt trajectory on a downward path projected to end the 2019/2020 Fiscal year at 93.5% of GDP.
Bank of Jamaica Gross Reserves and Foreign Exchange Market
Jamaica’s Gross reserves continue to exceed the Reserve adequacy metrics, providing a buffer against external shocks. The FX market experienced excess volatility due to imbalances in demand and supply in October and November 2019, which saw the BOJ executing flash auctions under B-FXITT of US$140m. EPOC is hopeful that the introduction of the FX trading platform and the further development of the FX forward market will bring increased transparency to the market, which could lead to reduced volatility and reduce the need for the sale of US$ through B-FXITT flash auctions as we go forward.
Inflation is low and stable albeit below target at 3.3% in October 2019, but core inflation has increased to 2.9% in September and October 2019, which could lead to inflation moving back into the target range of 4-6%.
Growth remains fairly low, projected by the PIOJ at 0.3 % for June to September 2019, but positive, in spite of the temporary closure of Alpart and unfavourable weather conditions, which impact agricultural output.
Supply Side Challenges
Jamaica continues to grapple with supply side challenges in crime and access to finance issues for SMEs and agriculture. EPOC notes the efforts around developing a national consensus on crime and the initiatives by the public and private sectors to address the access to finance impediments.
Global Uncertainty but Domestic Confidence remains high
While the global and regional outlook for growth is skewed to the downside, business and consumer confidence remain high in Jamaica along with the accommodative monetary stance maintained by the BoJ, which could see the continued growth in credit to the private sector and strong domestic demand.
While we all would like to see greater inclusive growth, the GOJ and the BOJ by all indications are on a sustainable path which should see Jamaica’s growth levels increasing to GOJ projected 2% growth levels by 2021/2022.