Jamaican economy 'remarkably strong' during 2006/07, says IMF
|
| Published on Saturday, March 10, 2007 |
Email To Friend Print Version |
KINGSTON, Jamaica (JIS): The International Monetary Fund (IMF) has said that the Jamaican economy has performed "remarkably strong" during the 2006/07 fiscal year and was on target to achieve its best growth performance in more than a decade.
As contained in the conclusion statement of the Jamaica 2007 article IV Consultation, which was tabled in the House of Representatives on Tuesday by Minister of Finance and Planning, Dr Omar Davies, "the economy has made a strong recovery from shocks encountered in 2004-05 and real economic growth of almost three percent is expected in financial year 2006/07 up from two percent the previous year and 0.4 percent the year before".
"This robust economic performance is being underpinned by the strength of the agricultural and tourism sectors. Production has expanded sharply across all agricultural categories and the sector as a whole is now projected to grow by 11 per cent this year," said the report.
It added that the important tourism sector is expected to register double digit growth for the fiscal year, notwithstanding some weakening in January on account of unseasonably warm weather in North America.
The statement made reference to the fact that the Bank of Jamaica had successfully managed to lower inflation without constraining the economic recovery. It added that "annual headline inflation is on track to fall about 6½ per cent at the end of the fiscal year, compared to a recent high of over 19 per cent in September 2005 and a target of 9½ per cent for the year".
The document also mentioned that the external current account balance was on an improving trend and capital inflows have been strong through 2006. "The current account deficit should decline to 10¾ percent this fiscal year, from
11½ percent last year. This improvement is the result of strength in exports, including non traditional products, as well as robust receipts from remittances and tourism.
The IMF statement also pointed out that the exchange rate remained broadly stable during 2006 despite cuts in interest rates, but the currency came under some pressure early in the new year.
"Through most of 2006 capital inflows enabled the Bank of Jamaica to purchase foreign exchange in the market without putting excessive pressures on the exchange rate. All in all, the nominal bilateral rate vis-a-vis the US dollar depreciated by under 4 per cent (year on year) during 2006," the document said.
The statement also mentioned that Jamaica had met its budget targets "through the first eight months of the fiscal year, but a large gap emerged in December".
"Through November, a small revenue shortfall had been more than offset by lower capital expenditures, resulting in a smaller than programmed budget deficit. In December, however, monthly revenues fell short of target, in amounts by 0.7 per cent of annual GDP, mostly on accounts of wages," it said.
In the meantime, the IMF pointed out that after the upcoming elections, the then government would have an important opportunity to "unleash Jamaica's full economic potential".
"It will be an opportune time to reinvigorate the macro economic strategy with decisive actions to put the debt ratio more securely on a downward path. Such reinvigoration of the strategy will help to promote credibility and stability over the medium term and thus stimulate private sector investment and growth," the statement said.
The IMF also recommended deep reforms to ensure "that the role of the government in the economy is commensurate with an environment where the private sector is the engine of growth will be key". | | | | Reads : 168 | | | |
|
|
