Caribbean & Central America - September 2013 (ISSN 1741-4458)

In last month’s issue we looked in detail at the widespread assertions from some analysts that Jamaica is on its way to being a failed state.  Our conclusion was that while Jamaica is undoubtedly struggling, there is no good reason to suppose that it is failing.  During the past month Finance Minister Peter Phillips has gone further and argued that while there is still pain to come, the country could now be past the worst, and it does indeed seem that progress is being made on both the economic and security fronts.

On 27 August, the programme director for the Planning Institute of Jamaica’s Plan Development Unit, Richard Lumsden, said that the numbers for murders and other serious violent crimes were down by 11% in the first six months of 2013.  For the first six months of 2013, the murder rate was 19.9 per 100,000 inhabitants, down 3.4% from 20.6 per 100,000 in the same period of 2012.  The figure for serious and violent crimes in the first six months was 172 per 100,000, down by 10.6% from 192 in the same period of 2012.  The figures reflect the continuation of a downward trend that began in June 2010.

On the economic front, Phillips said on 4 September that he believed Jamaica would do better than envisaged in the International Monetary Fund (IMF) agreement because “the targets in the programme are defined conservatively [and] they don’t take account of major projects [such as] the ports being established, integrated resort development, some additional hotel construction…”

The finance minister was in part anticipating the 11 August announcement of a major Chinese investment of US$1.5bn in Jamaica’s main port.  Making the announcement, Works Minister Omar Davies said: “That investment will change the employment picture across the entire Kingston Metropolitan Region.”  Davies said that the Chinese company involved intended to make Jamaica its central location for the Western hemisphere and that “the range of possibilities is mind-blowing”.

For its part, the IMF published a relatively upbeat statement on 22 August at the conclusion of a staff mission to Jamaica.  It admitted that recent economic developments “mostly confirm the challenges to the Jamaican economy”.  These included an economic contraction estimated to have been 0.7% in FY2012/13 and an unemployment rate as high as 16.3% at the end of April.  Inflation in July had reached 9.7% year-on-year.

However, on a more positive note, Jamaica’s fiscal performance for 2012/13 outperformed projections, returning a primary surplus of 5.4% of GDP.  The IMF statement then went on to say: “Overall policy implementation thus far under the programme has been strong and structural reforms are progressing.  All quantitative performance targets and indicative targets for end-June were met.”

For FY2013/14, the government is targeting a primary surplus of 7.5% of GDP, and a budget to meet this target has been adopted and is being implemented.  The next important milestone will be the tabling before parliament by end-September of an Omnibus Incentive Tax Act.  The tax reform is intended to broaden the tax base, simplify the system, reduce rates, and support growth.

The IMF statement concluded that “Provided that performance remains strong, Board consideration of the first review of Jamaica’s IMF-supported program under the EFF could take place late September. Upon approval, SDR 19.97 million (about US$30 million) would be made available to Jamaica.”

• “On 27 August, the programme director for the Planning Institute of Jamaica’s Plan Development Unit, Richard Lumsden, said that the numbers for murders and other serious violent crimes were down by 11% in the first six months of 2013.  For the first six months of 2013, the murder rate was 19.9 per 100,000 inhabitants, down 3.4% from 20.6 per 100,000 in the same period of 2012.  The figure for serious and violent crimes in the first six months was 172 per 100,000, down by 10.6% from 192 in the same period of 2012.  The figures reflect the continuation of a downward trend that began in June 2010.”