By Al Edwards, Financial EditorAN INTERNATIONAL Monetary Fund (IMF) team is currently on the island to conduct a review of the country's economic performance and will publish the results of its Article IV Consultation some time in July.
Speaking to Wednesday Business last night, the Minister of Finance & Planning, Dr. Omar Davies said: "The IMF is on the island with a team in order to conduct an Article IV Consultation which will be released as a published document. There will be two studies done per year, both of which will assess our economic progress and programmes for growth. We currently have loan agreements with the Inter-American Development Bank (IDB) and grants totalling some 40 million euros from the European Union. The disbursement of these loans is largely dependent on the reports submitted by the IMF."
In the 2004/2005 Budget debate, Dr. Davies stressed the importance of demonstrating to the country's creditors that Jamaica is serious about living within its means. In what is generally regarded as a good budget, he made it clear that it was important to reduce and maintain low interest rates. This has been demonstrated by the central bank already cutting interest rates nine times since the start of this calendar year, and 15 times since March 2003. This may well have a positive impact on debt servicing and it is believed will reduce the country's percentage expenditure on debt. Dr. Davies has not added any new taxes and the increased user fees is not expected to impact the business community adversely.
Against the background of sustained stability in the foreign exchange market, boosted by increased inflows as well as increased investor confidence, the return to lower levels of inflation is a trend that is expected to continue for the rest of the fiscal year.
RISING INVESTOR CONFIDENCE
The IMF will be reviewing Jamaica in the context that over the last six months the prevailing economic conditions have been characterised by increasing levels of investor confidence, improvements in the fiscal position and strong foreign exchange inflows. The net international reserves (NIR) now stands at US$1.7 billion, the highest it has been since March 2002.
The economy is estimated to have grown in the range of 2.1 per cent to 2.3 per cent for the fiscal year 2003/04, with growth in all sectors except agriculture, and boosted by significant growth in both mining and tourism. Recent tourism figures show that visitor arrivals are back to their pre-September 11, 2001 levels. Jamaica saw approximately 124,152 visitors stopped over in Jamaica last month, an 18 per cent increase over the same period last year.
The Government has collected approximately $4.2 billion in revenue for the financial year 2003/2004 and registered some 4,114 new taxpayers, an improvement on the previous year.
The rating agency Moody's is also on the island to evaluate the country's economic performance and grade it accordingly. In February of this year, Moody's sounded an encouraging note on the Jamaican economy by affirming its stable outlook on the country's sovereign credit ratings.
Moody's' bright outlook was based on Jamaica's efforts at fiscal consolidation and the commitment by the Government to return to a balanced budget in 2005/2006 and the constitutional provision mandating debt-service as the first expenditure priority.
