The International Monetary Fund, IMF, says Jamaica’s implementation of its economic reform programme remains strong despite disappointing GDP growth.
The findings come from the IMF’s Article four consultations and third review of Jamaica’s implementation of the Precautionary Stand-By Arrangement.
The review was released this afternoon by the IMF’s executive board in Washington DC, which also raised concerns over lagging public sector reform.
The IMF says all quantitative criteria and structural benchmarks for end-December 2017 were achieved. It also praised the continued decline in public debt.
However, IMF Mission Chief, Dr. Uma Ramakrishnan says despite record employment levels and low inflation, Jamaica’s GDP growth remains disappointing.
She says agricultural decline continues to offset substantial growth in other industries such as tourism and mining.
The IMF notes that GDP Growth for 2017 was only 0.5-percent, with the growth forecast being revised down to 0.9-percent in fiscal year 2017/2018.
However, the IMF also blames entrenched structural obstacles, including crime, bureaucratic processes, insufficient labor force skills, and poor access to finance as continued hindrances to growth.
It says reducing the public wage bill is critical for the government to re-prioritize spending towards growth projects.
In that regard, the IMF is still concerned about the pace of wage negotiations.
Before the close of the 2017-2018 fiscal year, the government convinced several public sector unions to accept a four-year negotiating cycle versus the original two-year period.
Dr. Ramakrishnan is urging the government to use the much-needed breathing room to institute tough but necessary reforms.
Meanwhile, IMF Mission Chief, Uma Ramakrishnan, says the government should take the US sanctions against bauxite giant, UC Rusal, seriously.
However, Dr. Ramakrishnan says she doesn’t foresee any major fallout in the short term for Jamaica from the unilateral action.
The Russian-based UC RUSAL was among 12 companies and individuals sanctioned by the United States two weeks ago.
Meanwhile, Dr. Ramakrishnan says recent US tariffs against steel should not have an immediate material impact on the Alpart bauxite plant in St. Elizabeth.
Alpart is owned and operated by the Chinese based Jiuquan Iron and Steel, JISCO which suffered heavily from the recently issued US Tariffs.