Jamaica Gets Thumbs Up From IMF

Jamaica came in for high praise from the International Monetary Fund (IMF) in its fourth review of Jamaica’s performance under the program supported by the Stand-By Arrangement (SBA).

In a press release, Mr. Tao Zhang Deputy Managing Director and Acting Chair noted that Jamaica continues to maintain an impressive track record under the IMF Stand-By Arrangement.

“The authorities continue their impressive track record under the Stand-By Arrangement. While macroeconomic stability is entrenched, with reduced public debt and improving social and unemployment indicators, growth remains subdued. Against this backdrop, supply-side reforms to facilitate private sector investment is needed to achieve higher, sustained growth and job creation,” he stated.

He also noted that the Bank of Jamaica (BOJ) commitment to maintaining inflation within the 4-6 percent target range over the medium term and the recent tabling in Parliament of legislation to upgrade the BOJ Act is a step in the right direction as it will eventually lead to full-fledged inflation targeting.

Moreover, he posited that “Maintaining exchange rate flexibility and limiting FX sales during periods of disorderly market conditions is necessary to support an inflation targeting framework.”

Furthermore, he stated that planning by the local authorities to accelerate FX market development and the building of technical capacity in monetary operations is a welcome policy shift.

He also argued that the country’s public-sector wage bill needs to be set on a sustained downward path as “reduced wage outlays will allow the government to reprioritize public spending toward security, social assistance, and growth-enhancing capital expenditure.”

He noted that a reduction in the nation’s wage bill will require an overhaul and restructuring of the public sector compensation and allowance system as well as a reduction in the size of the government workforce.

Turning to the financial sector, he stated that it should be strengthened and be kept in line with the recommendations from the accompanying Financial Sector Stability Assessment.

“Priority should be placed on enhancing coordination, data collection, monitoring, and strengthening the technical capacity of the financial regulators. Improving consolidated and risk-based supervision are important reform areas. Addressing impediments that constrain access to finance would help support private-sector investment,” he said.

Yvad Billings, Readers Bureau, Fellow

Edited by Jesus Chan

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