By Judith Ugwumadu | 23 June 2014

The International Monetary Fund has agreed to disburse a further $70.9m to Jamaica after finding the island was making speedy progress in implementing agreed fiscal reforms.

Jamaica has so far received $414.4m through the extended arrangement under the IMF’s Extended Fund Facility agreed at the start of May last year. The programme is designed to tackle the challenges of low growth and high debt and has helped Jamaica to tighten its fiscal policy implement structural reforms, including wide-ranging tax reforms.

Naoyuki Shinohara, IMF deputy managing director and acting chair, said: ‘Jamaica’s programme implementation under the Extended Fund Facility has been commendable. The achievement of a primary surplus in a short time is impressive. Essential social spending has been safeguarded and steps are being taken to strengthen the social safety net. Continued support by the international community remains crucial as Jamaica is undertaking this difficult adjustment.’

The IMF said a gradual economic recovery was underway in Jamaica. It estimated that growth would be 0.9% in 2013/14, as mining, agriculture and tourism picked up. Unemployment remains high, but fell from 16% in April 2013 to 13.5% in January 2014. Inflation fell to 7.6%, year-on year, at the end of April. These factors also caused a sharp reduction in the current account deficit to 9.5% in 2013/14, said the IMF.  

The public sector’s fiscal position was balanced in 2013/14, following a deficit exceeding 4% of GDP.

Emerging signs of economic recovery and the improvements in fiscal and external balances were also welcomed. But the IMF noted that downside risks to the outlook remain high, and that the economic and social costs of the adjustment effort were substantial.