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JAMAICA | Country's economic programme remains firmly on track says EPOC

Featured Keith Duncan, co-chairman of the Economic Programme Oversight Committee Keith Duncan, co-chairman of the Economic Programme Oversight Committee
KINGSTON,  Jamaica, May 24, 2019 - The Economic Programme Oversight Committee (EPOC) is of the view that Jamaica’s Economic Programme remains firmly on track.

A statement from the EPOC said “Jamaica's Fiscal position continues to be in a good place with Jamaica exceeding targets and running a Fiscal surplus for 2018/19.The Bank of Jamaica continues in its accommodative stance with the reduction of interest rates to all-time lows, and for the second time in the past three months , the cash reserve ratio of the Banks have been reduced.

Revenue & Grants of $629.0B for the fiscal year (April-March) exceeded the budgeted amount of $627.6B (+0.2%) while Tax collections of $542.9B fell below the third supplementary budget FY2018/19 (-$1.6B).

Tax Revenues year over year increased by $46.0b (9.3%) from $496.8b for the period April 2017 through March 2018 to $543.0b for the comparable period in FY2018/19.

Expenditure for the twelve months of the fiscal year (April-March) was $13.3b below budget (-2.2%). Of this amount, Recurrent Expenditure was $10.7b below budget (-2.0%), while Capital Expenditure was $2.6b below budget (-3.8%).

“The implementation of these policy measures continues to contribute to the reduction in Jamaica's debt levels. Interest costs to the GoJ also continue to fall. The growth in credit to the Productive Sector is increasing year over year eclipsing the growth in consumer credit.

The recent aggressive Monetary Policy Actions should certainly create further stimulus to the Financial Sector to lend at lower and more favourable terms to the Private Sector which should spur greater growth in private credit and domestic investments.

In relation to the foreign exchange market, Co- Chairman of the EPOC Keith Duncan noted the volatile swings in the value of the Jamaican currency, which led to private sector calls for action by the monetary authority to stabilise the market.

“EPOC supports a flexible exchange rate and market-determined foreign exchange rate, as the Bank of Jamaica continues to move towards full-fledged inflation targeting,” he said.

The Bank of Jamaica, BOJ, has resisted calls to intervene more aggressively in the market to steady the rate, and has remained consistent in its message that the movement towards a market-driven system would see fluctuations in the exchange rate in either direction. The BOJ has also appealed for patience, saying some of that volatility will be alleviated when the forex trading platform that is under development is commissioned.

The platform will facilitate interbank trading and allow for traders and exporters to buy currency months in advance at negotiated rates.

“This platform, when implemented, is to be integrated with the payments and settlement systems by June 2019 and, subsequently, regulations are to be issued by September 2019, which will allow all market participants to trade all foreign exchange transactions by the end of 2019,” Duncan said.

The EPOC said on 10 May 2019, the value of the Jamaican Dollar vis-a-vis the US dollar was J$136.54 = US$1.00, reflecting a depreciation of 1.17 per cent ($1.58) for the month to date. This follows depreciation of 6.72 per cent ($8.49) for April 2019.

The depreciation in the value of the Jamaica Dollar for the review period was influenced by: (1) strong demand from the energy, manufacturing and telecom sectors (2) increased demand related to capital market funding and portfolios.

As Jamaica moves into the final review under the Economic Programme, which would be in the last quarter of the 2019 calendar year, EPOC is strongly urging the GoJ, the BoJ and other stakeholders to remain focused on the implementation of the Institutional Framework that will protect the macroeconomic stability which Jamaica has achieved with great effort and sacrifice.

  • Countries: Jamaica

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