Dec 2016 Financial News

EPOC hopes for greater growth than 5 in 4 — Duncan

Dec 14, 2016

The renewed Economic Programme Oversight Committee (EPOC) co-chaired by Keith Duncan is targeting growth of 2.8 per cent by 2020 along with debt-to-GDP of 96 per cent, or 24 per cent lower than Jamaica’s current debt levels.

The new targets fall under a 3-year Precautionary Stand-By Arrangement (PSBA) with the International Monetary Fund (IMF), through which greater focus will be placed on non-borrowed Net International Reserves (NIR) to help cushion the country from shocks and to bolster the resilience of the financial system.

Duncan, group executive officer of Jamaica Money Market Brokers has now taken over from former co-chair Richard Byles, president of Sagicor, who remains on EPOC.

Duncan, who provided an update of Jamaica’s performance during a press briefing and handover ceremony of EPOC under the new PSBA, said the growth level is in line with targets set by the Economic Growth Council of 5.0 per cent by 2020 while the lowering of the country’s debt by 24 per cent will reduce the interest burden, freeing up resources for human investment and capital expenditure.

It means EPOC is anticipating debt reduction of 0.5 per cent every quarter over the next three years.

“Jamaica has had two good quarters of over 2.0 per cent growth. The Economic Growth Council has targeted 5.0 per cent growth in four years; the conservative numbers in this agreement are at 2.8 per cent in 2019/2020. However, the upside is for 5.0 per cent and we hope we can do more than that,” he told media representatives at Sagicor’s New Kingston office yesterday.

Duncan said EPOC is optimistic about Jamaica meeting or going beyond projected targets based on projected growth levels in nominal GDP and revenues in addition to the maintenance of a primary surplus target of 7.0 per cent.

“That is where this programme focused, around growth and while the programme focuses on growth it has been conservative in the projection of 2.8 per cent,” he said.

On November 21, EPOC signed a memorandum of understanding to monitor and report on macro-fiscal targets under the PSBA following the conclusion of the Extended Fund Facility with the IMF.

The new economic programme will provide Jamaica with emergency assistance of US$1.7 billion.

PSBA objectives include boosting of growth and employment; continuing public debt reduction; reprioritising and redefining the role of the public sector; creating space for growth-enhancing capital spending and expanding the social safety net.

Additionally, the programme hopes to continue the build-up of an operational toolkit for an eventual move towards inflation targeting with a flexible, market-determined exchange rate. The PSBA also involves further strengthening the resilience of the financial system and continuing the build-up of the NIR with a floor on non-borrowed reserves.

In doing so, Duncan said EPOC will also seek to involve more Jamaicans in the development process by diversifying the channels through which communication is done.

“More social media. We intend to use more Facebook, Instagram, etc, we would like to educate more Jamaicans about what these terms mean. We want to break it down so Jamaicans can really have a level of ownership of this plan and for them to see that if we are able to execute and to deliver on this plan Jamaica is in a much better place,” he said.

After review of October’s fiscal data, EPOC concluded that Jamaica’s fiscal numbers continue to perform favourably against the Government’s monthly targets.

The primary balance stood comfortably ahead of target at $56.2 billion, against Government targets of $241.2 billion. Based on EPOC projections, an indicative target of $300 billion should be realised by December 2016.

Total expenditure as at October stood at $293.9 billion against a target of $301.9 billion. According to Duncan, the shortfall in expenditure is driven by capital expenditure being behind budget by $7.2 billion, at $19.8 billion year-to-date spend, against a target of $26.9 billion.

Source:
BY KARENA BENNETT
bennettk@jamaicaobserver.com
Business reporter 
Wednesday December 14, 2016 

http://www.jamaicaobserver.com/business/EPOC-hopes-for-greater-growth-than-5-in-4---Duncan_83547