By Deon McLennon , ContributorTHE GOVERNMENT of Jamaica's (GoJ) ability to raise 200 million Euro underlines the current credibility of their fiscal policy.
Since the beginning of the year the GoJ has demonstrated their commitment through fiscal discipline and making necessary adjustments where required. Their hard work, planning and tough decisions have led to a culmination of positive elements which now make further interest rate reductions possible.
It has also led to an environment where investor confidence has been restored and reflected in the stability of the dollar, which augurs well for inflation returning to single digits this year. This gives the BoJ sufficient room to lower reverse repo rates as the Ministry of Finance seeks to refinance its maturing debt.
ANALYSIS
1. The T-Bill weighted was flat in June. With BoJ's 6-month repo rate at 15.05 per cent auction results are aligned with the BoJ rate.
2. Rates remained stable during the month of June.
3. CPI moved 0.8 per cent in June, the eighth consecutive month with inflation under 1 per cent.
4. Wages and salaries were marginally ahead of budget by $639 million. Domestic interest costs remain the largest variance being $104 million more than budgeted.
5. The N.I.R. declined in June. At current levels, it represents just over 15 weeks of imports of goods and services.
6. Total tourist arrivals year to date are up by 5 per cent when compared to a similar period last year. Cruise ship passengers account for 49 per cent of that total.
7. The BOP improved as exports grew (+US$95M) while imports declined by (US$117M). Tourism (+US$89M) and alumina (+US$92M) offset rum and remittance declines for the period. Fuel costs were up but shrinking consumer durables and capital goods ameliorated imports for this period.
8. U.S. deposits in the banking system rose to US$1.7B, an increase of US$249M when compared to Apr 03.
9. The country's internal debt stood at J$417B at Apr 04, up $37B from last year
10. The country's 12-month debt rose by US$500 million
Deon McLennon is assistant manager, research and analysis at Pan Caribbean Financial Services Ltd.
