IMF: Risks to Jamaica’s Economic Outlook “Tilted to the Downside”

By: Caribbean Journal Staff - June 9, 2012

Above: Montego Bay

By the Caribbean Journal staff

The outlook for Jamaica’s economy is one of low growth, along with weaker debt and fiscal positions, in the absence of strong fiscal and structural reforms, according to a report from the International Monetary Fund.

The IMF’s report followed its Article IV Consultation with Jamaica, which concluded May 30.

Jamaica recorded a “fragile recovery” in 2011, following three years of recession from 2008 to 2010 following the global financial crisis.

GDP in Jamaica grew by 1.2 percent in the fiscal year 2011/2012, as agriculture and alumina showed what the IMF called promise.

But the country’s fiscal position was weaker than projected, according to the IMF, reflecting lower tax revenues associated with “cuts in fuel taxes, weak tax administration and widespread use of tax incentives and waivers.”

The fund said real GDP was projected to grow by 0.9 percent in 2012/2013, down from a growth rate of 1.2 percent in 2011/2012.

The ratio of government debt to GDP remained high, at about 140 percent, the fund said, compared with an objective of 134 percent under the programme.

Without strong reforms, the IMF said real GDP growth would hover around 1 percent a year, the public sector deficit would increase to around 9 percent and debt would exceed 150 percent of GDP over the medium term.

Ongoing improvements to Jamaica’s regulatory and supervisory frameworks, along with its crisis management framework, could contain those risks, however.

“The risks to the outlook are tilted to the downside, given the uncertainties about the pace of the global recovery and world commodity prices, as well as natural disasters,” the fund said. “Further, rollover and interest rate risks on the public debt could be exacerbated by waning investor confidence and a continued drain on net international reserves could lead to intensified portfolio hedging.”

The IMF’s directors said they regretted that the successful debt exchange under the 2010 Stand-By Arrangement “had not been accompanied by fiscal consolidation” to put Jamaica’s public debt on a sustainable downward path, though they welcomed the government’s efforts to increase its primary surplus.

Directors urged Jamaica to implement a “robust reform agenda” aimed at enhancing its business climate, developing the private sector, reforming the energy sector and improving the country’s resilience to natural disasters.

Popular Posts belize hotel mayan world

At the Falling Leaves Lodge in Belize, a Portal to the Maya World

SAN IGNACIO — There has been some form of settlement on this site for more than 3,000 years, here on a leafy hill above the town of San Ignacio, Belize. In other words, this is no ordinary hill. This is Cahal Pech, […]

In San Ignacio, Belize, The Art of Adventure (And Pupusas)

pupusas belize

The sizzle is calling you. In the early morning, corn tortillas stuffed with cheese and beans and meat sing a particularly strong siren song.  It could be that perfect blend of dough and heat, or the aroma. It might just […]

Delta Is Adding More Nonstop Curacao Flights, Citing “Booming Demand”  

the beach at the avila hotel in curacao

Curacao is hotter than ever, with a wave of new hotels and record-breaking tourism numbers. And just a few months after Delta made its long-awaited return to the island, the carrier is adding even more flights.  The reason? What Delta […]

Related Posts doctors cave beach with waves

Jamaica Adding New Automated Passport Kiosks

In a a bid to expedite processing at two of the Caribbean’s busiest airports, Jamaica is adding new automated passport control kiosks in Kingston and Montego Bay.  The new kiosks aim to “streamline passenger flow,” according to a statement from […]

The Cool List: the Coolest Hotels in the Caribbean for 2024

the cool list 2024

They’re different. They’re fun, they’re colorful, they’re unique. They’re themselves. The Caribbean has no shortage of cool hotels and in this, Caribbean Journal’s 12th annual Cool List, we highlight the places that hit you in a different way, that do […]

The 25 Best All-Inclusive Resorts in the Caribbean, from Adults-Only to Boutique

hammock cove in antigua

What is an all-inclusive resort? In recent years, the answer to that question has changed dramatically. Today, all-inclusive means a resort that is at the cutting edge of travel trends, one that is catering to the demands of a massive […]


Sign up for Caribbean Journal's free newsletter for a daily dose of beaches, hotels, rum and the best Caribbean travel information on the net.

No. Thank You