Jamaica’s Economic Recovery “Fragile,” With Strong Downside Risks: IMF
Above: IMF Mission Chief for Jamaica Luis Breuer and Jamaican Finance Minister Dr Peter Phillips (FP)
By the Caribbean Journal staff
While Jamaica saw positive GDP growth in 2011, following three consecutive years of decline, its recovery remains “fragile,” according to the International Monetary Fund.
An IMF mission visited Jamaica from March 8 to March 21 to conduct its Article IV consultation and initiate discussions on a potential Fund-supported economic programme.
The visit included meetings with Prime Minister Portia Simpson Miller, Finance Minister Dr Peter Phillips, Bank of Jamaica Governor Brian Wynter and other senior officials.
“The recovery is fragile and there are strong downside risks,” said Luis Breuer, the Fund’s mission chief for Jamaica.
The IMF projects what it called “low” growth in 2012/2013 of about 1 percent, with the public sector and external current account deficits projected to widen. The IMF also projected public debt to rise this year.
“Jamaica thus faces significant challenges,” he said. “A key challenge is to attain higher and sustainable rates of economic growth, while reducing macroeconomic risks, including from the high public debt and high unemployment.”
According to the IMF, Jamaican unemployment is currently at 12.8 percent, and the country’s fiscal situation has “deteriorated.” The ratio of debt to GDP currently stands at 140 percent of GDP, including PetroCaribe debt.
Jamaica also previously delayed implementing a structural reform program, which adversely affected fiscal performance, the IMF said.
The IMF and Jamaican authorities agreed that would require action on three fonts: a growth-oriented environment aimed at improving productivity and competitiveness, strong microeconomic policies through higher surpluses and a framework to ensure social cohesion.
The Fund recommended improvement to tax reform and administration in this regard in the near term.
Jamaica intends to continue discussions with the IMF team during the Spring Meetings in Washington, which take place from April 20 to 22.
