Caribbean & Central America - January 2014 (ISSN 1741-4458)

Back in September 2013, Jamaica was given a boost when Standard & Poor’s raised its assessment of the country’s local currency debt to B- from CCC+. S&P said it expected the government to meet its fiscal targets this year, push ahead with its tax reforms, and avoid a further deterioration in its foreign-currency reserves. The IMF added its own cautious assessment in December following the second review of Jamaica’s performance under the terms of the May 2013 program.

The IMF reported on “signs of a gradual recovery” which should see GDP growth of “just under 1%” for 2013/14 as a consequence of improved activity in the tourism, mining, and agricultural sectors. It also confirmed S&P’s optimism about the external position, saying that “international reserves are in line with program requirements” even though they remain low.

Nevertheless, although Jamaica is pressing ahead with the next round of reforms, including “strengthening the fiscal policy framework”, the IMF warns that risk to the program “remains high”. It warns of “possible external shocks, weak confidence, and anaemic external demand that could hamper the growth recovery”. It is also concerned about possible shortfalls in revenue collection and “policy slippages”.