May 2015 Financial News

IMF expects Jamaica to pass eighth test

May 13, 2015

JAMAICA should pass its eighth International Monetary Fund (IMF) test -- despite requiring a technical waiver on missing a revenue target.

The IMF mission currently visiting the island indicated that the IMF executive board will make a final decision in early June. Upon approval the island will gain access to a further US$40 million.

Uma Ramakrishnan, the IMF's new mission chief for Jamaica, explained that the island missed a key revenue target which related to the nominal value of the primary surplus. But that the primary surplus still met the critical target of being 7.5 per cent of the country's output or gross domestic product (GDP).

"I think it's a bigger concern for people in Jamaica than it is for us," Ramakrishnan said of missing the nominal target at a press conference held at the Ministry of Finance and Planning in Kingston. "What is really critical for us is the central goals of the programme. Minor deviations happen and that's how we see this revenue performance."

Data indicates that the country recorded a primary balance of $117.2 billion to March 2015 which represented a $4.1 billion shortfall on the $121.3 billion target. Tax revenues at $370.9 billion were also lower than budgeted levels of $384.3 billion. However, net international reserves at US$2.35 billion are above the target of US$1.4 billion.

Ramakrishnan described the waiver as technical in nature rather than an outright breach.

"It's a routine procedure that's involved, it's what's called a waiver. Its just a technicality, when any performance target is missed in a programme as with this one. There is a technicality called waiving and that procedure is what we followed," she explained in response to a media query.

Ramakrishnan added that she thinks Jamaica remains steadfast in maintaining the "critical performance goals" of the programme. The IMF mission came to Jamaica to conduct its eighth review of Jamaica's performance under the Extended Fund Facility (EFF).

"As you are aware in respect to the primary surplus target, Jamaica achieved the 7.5 per cent of GDP out-turn, as we have done since the inception of the programme," stated finance minister Dr Peter Phillips at the press conference. "For technical reasons to do with lower inflation and slower growth in the GDP, the nominal target for the primary surplus was not achieved."

Phillips anticipates growth of 1.6 per cent for the ensuing fiscal year or lower than the 2.0 per cent predicted by the IMF.

Source:
BY STEVEN JACKSON
Business reporter
R03;jacksons@jamaicaobserver.com
Jamaica Observer
Wednesday May 13, 2015    

http://www.jamaicaobserver.com/business/IMF-expects-Jamaica-to-pass-eighth-test_18929641