July 2, 2024
- The IMF team and the Jamaican authorities reached a staff-level agreement on the completion of the third reviews of Jamaica’s Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF). The IMF’s Executive Board is expected to consider these reviews in August.
- The authorities’ commitment to macroeconomic stability and strong policy frameworks continue to allow the country to respond prudently to recent global shocks. Growth has been solid, the external position has strengthened, and the economic outlook remains positive.
- The PLL continues to provide valuable insurance against downside risks while the RSF has supported Jamaica’s ambitious agenda to increase resilience to climate change, transition to renewables, enhance climate focus in policy frameworks and risk management, and catalyze climate financing.
An International Monetary Fund (IMF) team led by Mr. Esteban Vesperoni held meetings with the Jamaican authorities during June 24-28 to review the implementation of reforms under the PLL and the RSF Arrangement. At the conclusion of the mission, Mr. Vesperoni issued the following statement:
“The IMF team and the Jamaican authorities reached staff-level agreement on the Third Reviews of the Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF) Arrangement. The agreement is subject to approval by the IMF Executive Board, which is expected to consider the reviews in August.
“Supported by entrenched macroeconomic stability and strong policy frameworks, Jamaica was able to respond prudently to recent global shocks. These policies supported the economy, reduced public debt and inflation, and strengthened the external position. Growth has been strong, resulting in a record-low unemployment in the context of a strong cyclical position. Inflation has returned to the central bank’s (BOJ) target band and the BOJ continued to pursue a data-dependent approach to monetary policy decisions. Public debt continues its strong downward trajectory, international reserves reached a record-high level supported by the recovery of tourism, and the financial system remains well capitalized and liquid.
“The outlook is positive but subject to downside risks. Growth is expected to converge to potential and inflation to return close to the mid-point of the 4-6 percent target band in 2024 amid moderating commodity prices. Nonetheless, global risks remain high and include tighter-than-expected global financial conditions, lower global growth and its impact on tourism and remittances, and an intensification of geo-political conflicts that increase global commodity prices. Natural disasters are an ever-present risk.
“The authorities have continued to implement their policy agenda under the Precautionary and Liquidity Line. They took steps to enhance the resolution of non-viable financial institutions and improve data adequacy. The fiscal position has contributed to further reduction of public debt and international reserves continued to increase over the last fiscal year, strengthening external buffers, in line with objectives of the authorities’ program. The authorities continue to treat the PLL as precautionary.
“The authorities remain committed to primary surpluses to reach a 60 percent debt-to-GDP ratio by FY2027/28, as prescribed by the country’s Fiscal Responsibility Law. The FY2024/25 budget aims for a primary surplus consistent with this goal. Monetary policy remains data dependent and focuses on safeguarding inflation convergence to the mid-point of the central bank’s target band.
“Significant progress is being made by the authorities with their ambitious agenda to make the economy more resilient to climate change. In the context of the authorities’ policy agenda under the Resilience and Sustainability Facility, they have completed reform measures that apply quantitative analysis of climate related fiscal risks, took steps to adopt fiscal measures to incentivize investment in renewables and establish reporting requirements for financial institutions to implement climate risks stress testing, and established a framework for green-bond issuance. The completion of these reforms makes available SDR191.45 million (about US$255 million) under the arrangement.
“Advancing Jamaica’s ambitious agenda to accelerate the transition to renewables, increase resilience to climate change, enhance the climate focus in fiscal policy frameworks, and strengthen the management of climate risks by financial institutions can catalyze climate financing that will help foster growth through a range of investments supporting energy efficiency, emissions reduction, and increased resilience to the effects of climate change.
“The IMF team is grateful to the Jamaican authorities and other counterparts for their hospitality and very productive discussions.”