Fri | May 24, 2019

IMF Review | Public debt to fall below 100% of GDP, first in 18 years

Published:Tuesday | April 23, 2019 | 11:46 AM
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Jamaica’s public debt is projected to fall below 100 percent of Gross Domestic Product (GDP) in 18 years.

The Executive Board of the International Monetary Fund (IMF), in its review put out on Monday of Jamaica’s performance under the stand-by agreement, said GDP is projected to fall to 98.7 percent FY18/19.

The last time this happened was in the 2000/01 financial year, the IMF noted.

Here are other highlights from the report:

* Unemployment is near all-time lows, business confidence is high, and the economy is estimated to have expanded by 1.8 percent in 2018, buoyed by mining, construction and agriculture.

* International reserves are estimated to be comfortable under a more flexible exchange rate.

* All quantitative performance criteria at end-December 2018 were met, and the structural benchmark to table in Parliament amendments to the Bank of Jamaica Act was completed in October 2018.

* In December 2018, however, inflation was 2.4 percent, triggering staff consultation under the Monetary Policy Consultation Clause; it remained at the same level in February 2019.

* For its part, the Government of Jamaica’s FY19/20 budget is reducing the primary surplus by ½ percent of GDP to 6½ percent without compromising the medium-term public debt anchor. The fiscal loosening supports growth and social spending by providing resources for security, infrastructure, school meals and transportation.

* Further, the cuts to distortionary financial taxes will help support economic activity and job creation. The private sector, for its part, should capitalise on these fiscal measures to increase investment, and create new opportunities for advancing financial inclusion.

* Reduction in the primary surplus target by ½ percent of GDP to 6½ percent in the FY19/20 Budget will facilitate higher spending in social assistance, citizen security and infrastructure.

* Reducing the highly distortive financial turnover taxes is expected to lower the cost of doing business and increase economic activity.

* Tackling governance issues swiftly and forcefully is necessary to enhance transparency and accountability, bolster trust in public institutions, and protect public funds.

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