The International Monetary Fund (IMF) has given high marks for Jamaica’s performance under the Stand-By Arrangement (SBA) with the Fund, saying “commitment to the economic reform programme remains strong”, with “economic indicators at historical highs, supported by a favourable macroeconomic environment”.
In its recently released 70-page review of Jamaica’s economic performance, the IMF notes that “unemployment is falling, new jobs are being created, and there is robust activity in construction and hotels and restaurants. Inflation and the current account are low, helped by relatively stable oil prices and the Government’s policy efforts”.
The Fund says “the historically low yields” in the recent global bonds reopening reflect “Jamaica’s hard-won credibility”.
“After more than four years of difficult economic reforms, Jamaica’s programme implementation remains exemplary,” the Washington-based multilateral notes.
Giving the second review under Jamaica’s SBA, the Fund says that strong domestic ownership of the reform agenda across two different governments and the broader society has helped to entrench macroeconomic stability and fiscal discipline.
The IMF hails the “landmark public pension reform bill” passed recently. It says that while there are programme risks, commitment by the Government to the reform programme “remains strong”.
Among the risks identified by the IMF is the challenge of public-sector reform and ongoing public-sector wage negotiations. The Fund says there is need to free up resources through redesigning public-sector wage scales to retain skilled employees and to appropriately reward performance.
“This would pave the way for rebalancing public spending from wages to growth-enhancing outlays on health (where Jamaica’s expenditures are relatively low), education (where an overly large share of expenditures is on wages), security and capital spending,” the Fund says.
The Fund also mentions weather-related shocks as potential risks to the programme, highlighting growing concern about the issue of climate change.
The international lending agency praises the Government for the fact that “inflation and the current account deficit remain subdued”. It also commends the Government for its divestment programme, observing that “the authorities are accelerating their efforts to divest underutilised public assets and using proceeds towards public debt reduction”.
The Fund cites the Government’s “sustained commitment (to macroeconomic stability and fiscal discipline)” and the ongoing programme monitoring by civil society that has paved the way for the reforms to be “domestically owned, designed and executed”.