Sep 2006 Financial News

IMF: Jamaica recovering well

Sep 14, 2006

An International Monetary Fund (IMF) report on Jamaica noted that the economy is gradually recovering from shocks, particularly the natural disasters experienced over the past two years.

The report noted that since 2004, real Gross Domestic Product was adversly affected by natural disasters which caused a sharp increase in inflation that was reflected in higher agricultural prices and larger oil import costs.

But by the end of 2005, the economy rebounded.

“During the fourth quarter of 2005, however, real GDP grew by 2.4 per cent, boosting growth for the calender year to 1.4 per cent, up from 0.9 per cent in 2004. Headline inflation stood at 8.5 per cent in May 2006 compared to 19 per cent in September 2005,” the report noted in its executive summary.

It also pointed to the progress being made in reducing high debt but at a slower past than expected which was “in part, to wider-than-anticipated budget deficits as well as slower growths.”

“Budget outcomes for the past two fiscal years have not met expectations—including that of balancing the budget in fiscal year 2005/2006—mainly on account of lower-than-anticipated revenue collections,” it said.

In view of the high debt, the mission viewed the recovering economy as providing an opportunity to aim for a more ambitious objective.

The IMF recommended taking both revenue and expenditure measures. They noted that by international standards, Jamaica’s primary surplus remains extraordinarily high and that the important point was that the overall deficit was expected to continue to improve, by close to one per cent of GDP relative to the fiscal year 2005/2006 outturn.


Source:
The Trinidad Guardian
Thursday 14th September, 2006

http://www.guardian.co.tt/business2.html