January 26, 2024
The International Monetary Fund (IMF) conducted a virtual mission and meetings in Kingston with Jamaican authorities from January 8-18 for the 2024 Article IV consultation and to review the implementation of reforms under the Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF). Esteban Vesperoni led the IMF team, and at the end of the mission, he announced a staff-level agreement on the Second Reviews of PLL and RSF.
Highlights of the statement include:
- Economic Achievements: Jamaica has successfully reduced public debt, controlled inflation, and strengthened its external position. The country has a strong record of investing in institutions and prioritizing macroeconomic stability, allowing for a prudent response to recent global shocks.
- Economic Recovery: The economy continued to recover in 2023, with projected GDP growth at 1.7 percent in FY2023/24. Tourism has surpassed pre-pandemic levels, unemployment has fallen to a record low of 4.5 percent, and inflation is converging to the Bank of Jamaica’s target band.
- Outlook: The outlook suggests sustained growth and inflation within the target range, supported by sound external and fiscal positions, financial system stability, and a current account surplus.
- Global Risks: Despite positive indicators, global risks remain high, including potential increases in financing costs, regional conflicts affecting commodity prices, and climate-related events impacting economic activity.
- Policy Implementation: The Jamaican authorities continue to implement sound macroeconomic policies, with fiscal policies supporting debt reduction, a tight monetary policy countering inflationary pressures, and ongoing reforms under PLL and RSF.
- Further Improvements: Policy frameworks are continuously improving, with plans for the Fiscal Commission, wage bill reform, proactive debt management, adoption of Basel III framework, and initiatives for financial supervision and climate resilience.
- Climate Change Agenda: Jamaica is addressing climate change challenges by incorporating climate elements in public investment and partnerships, assessing climate risks in the financial system, and working on renewables and energy efficiency.
- Social Safety Net: Efforts are underway to strengthen the social safety net, including plans for an unemployment insurance scheme and the expansion and enhanced targeting of the conditional cash transfer program to foster inclusive growth.
The agreement reached is subject to approval by the IMF executive board, expected in February 2024. Additionally, the completion of the review will make available Special Drawing Rights, SDR191.45 million (about US$255 million) under the RSF.
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