An International Monetary Fund (IMF) team, led by senior economist Esteban Vesperoni, and Jamaican authorities have reached a staff-level agreement on the completion of the first reviews of the island’s Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF).
In a statement over the weekend, the IMF said that its Executive Board is expected to consider these reviews in August.
The authorities’ commitment to macroeconomic stability and strong policy frameworks continue to allow the country to navigate smoothly the difficult global environment. They have facilitated a steady recovery in growth despite the difficult global environment.
The PLL continues to provide valuable insurance against downside risks while the RSF supports Jamaica’s ambitious agenda to increase resilience to climate change, transition to a zero-carbon economy and catalyze climate financing.
The Vesperoni-led IMF team held meetings with the Jamaican authorities during June 12-16 to review the implementation of reforms under the PLL and the RSF Arrangement.
At the conclusion of the mission, Vesperoni issued the following statement:
“The IMF team and the Jamaican authorities reached staff-level agreement on the First Reviews of the Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF) Arrangement. The agreements are subject to approval by the IMF Executive Board, which is expected to consider the reviews in August.
“Over the past few years, Jamaica has been buffeted by a difficult global environment. However, entrenched macroeconomic stability and sound policy frameworks are helping the country to navigate this complex global environment. The economy has been recovering strongly—GDP growth for FY2022/23 is estimated at 4.3 per cent. It was supported by a strong rebound in tourism—which has reached pre-pandemic levels—and the reopening of one of the largest alumina plants, which offset the impact of the terms-of-trade shock from the war in Ukraine. Inflation is close to the central bank’s target band. Buoyant tourism and still strong—although moderating—remittances more than offset the large import bill from high fuel, food, and freight prices resulting in a low current account deficit, and international reserves are growing and are at healthy levels. The public debt has continued to fall, and the financial system remains well-capitalised and liquid.
“The outlook points towards continued growth, and inflation is expected to return to the mid-point of the central bank’s target range by year-end. Nonetheless, global risks remain high and include tighter than expected global financial conditions, higher than expected global energy and food prices and the ever-present risks from climate events.
“The authorities have made good progress in implementing their policy agenda under the Precautionary and Liquidity Line. They overperformed on indicative targets and met structural benchmarks, supporting efforts to bring the AML/CFT framework to international best practice and improve data adequacy. The fiscal balance recorded an overall surplus in FY2022/23. International reserves continued to increase over the last fiscal year, strengthening external buffers, in line with objectives in the authorities’ program. The authorities continue to treat the PLL as precautionary.
“The authorities remain committed to primary surpluses to reach a 60 percent debt-to-GDP ratio by FY2027/28, as prescribed by the FRL. To this end, they aim for a primary surplus in the FY2023/24 budget that will continue to lower the public debt. Monetary policy remains data dependent and focuses on inflation convergence to the mid-point of the central bank’s target band.
“Significant progress is being made by the authorities with their ambitious agenda to green the economy and make it more resilient to climate change. In the context of the authorities’ policy agenda under the Resilience and Sustainability Facility, they are completing reform measures that will introduce important climate-related elements in the fiscal framework and foster energy efficiency. The completion of these reforms will make available SDR191.45 million (about US$255 million) under the arrangement.
“Reducing Jamaica’s susceptibility to natural disasters, rising sea level, and extreme weather events will help foster growth and job creation as well as incentivize private sector financing for a range of investments, including those related to energy efficiency, emissions reduction, and increased resilience.
“The IMF team is grateful to the Jamaican authorities and other counterparts for their hospitality and very productive discussions.”