November 08, 2018
Jamaica’s Net International Reserves (NIR) totaled US$2,925.33 million as at October 2018, reflecting a decrease of US$101.39 million relative to the US$3,026.72 million reported as at the end of September 2018 (see figure 1).
Changes in the NIR resulted from an increase in Foreign Assets of US$108.79 million to total US$3,460.06 million compared to the US$3,568.84 million reported for September 2018. The decline in ‘Currency & Deposits’ contributed the most to the decrease in Foreign Assets. ‘Currency & Deposits’ as at October 2018 totaled US$2,895.95 million reflecting a decrease of US$96.03 million compared to US$2,991.98 million booked as at September 2018.
‘Securities’ amounted to US$311.32 million; US$10.35 million less than the US$321.68 million reported in September 2018. Foreign Liabilities for October 2018 amounted to US$534.72 million compared to the US$542.12 million reported for September 2018. Liabilities to the IMF accounted for 100% of total foreign liabilities, reflecting a US$7.40 million decline month over month from September 2018.
At its current value, the NIR is US$159.65 million less than its total of US$3,084.98 million as at the end of October 2017. The current reserve is able to support approximately 32.13 weeks of goods imports or 19.07 weeks of goods and services imports.
The country came in slightly below the benchmark of US$3.28 billion outlined by the International Monetary Fund for March 2018. Under the New Agreement, the IMF noted, “Considerable progress has been achieved on macroeconomic policies and outcomes. Fiscal discipline anchored by the Fiscal Responsibility Law has been essential to reduce public debt and secure macroeconomic stability. Employment is at historic highs, inflation and the current account deficit are modest, international reserves are at a comfortable level, and external borrowing costs are at historical lows.”
In its fourth review, the IMF noted, “The authorities continue their impressive track record under the Stand-By Arrangement. While macroeconomic stability is entrenched, with reduced public debt and improving social and unemployment indicators, growth remains subdued. Against this backdrop, supply-side reforms to facilitate private sector investment are needed to achieve higher, sustained growth and job creation. “The Bank of Jamaica (BOJ) remains committed to maintaining inflation within the 4-6 percent target range over the medium term. The recent tabling in Parliament of legislation to upgrade the BOJ Act is an important step toward the eventual shift toward full-fledged inflation targeting. Maintaining exchange rate flexibility and limiting FX sales during periods of disorderly market conditions is necessary to support an inflation targeting framework. The authorities are also planning to accelerate FX market development and the building of technical capacity in monetary operations.” The Net International Reserve (NIR) target outlined as per the new agreement for the 2018/19 fiscal year is US$3.22 billion (see figure 2 above). As at October 2018, the Country is US$0.29 million below targeted amount.
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