The International Monetary Fund (IMF) says Jamaica's improved economic growth during the fiscal year 2018-19 was buoyed by construction and mining and urged the authorities to put in place 'strong institutions' to entrench the hard-earned gains from the economic reforms.
An IMF delegation, headed by Uma Ramakrishnan, ended a five-day visit to the island on Friday, ahead of the sixth and final review under the US$1.6 billion 36-month Stand-by Agreement (SBA) planned for September.
An IMF statement said that the team took stock of progress on Jamaica's economic reform programme supported by the IMF's precautionary SBA.
Ramakrishnan said that unemployment is now at an all-time low of eight per cent and that the inflation outturn was 3.9 per cent in April, closer to the Bank of Jamaica's (BOJ) target range of four to six per cent.
She said the primary surplus was almost 7.5 per cent of gross domestic product (IGDP) in the financial year 2018/19, with public debt falling to about 95 per cent of GDP at end-March 2019, the lowest since financial year 2000/01.
She said non-borrowed reserves were US$430 million above target at end-March 2019, providing critical buffer against unforeseen global economic shocks.
'The IMF team welcomes the recent BOJ's accommodative policies aimed at restoring inflation to the target range. The reduction in the Cash Reserve Requirement by 5 ppts this year and the successive policy rate cuts to 0.75 per cent should support private credit expansion as the government continues to deleverage.'
But Ramakrishnan said, enhanced central bank supervision and risk management practices at lending institutions will be critical to ensure careful assessment of risks to maintain financial stability.
'Meanwhile, the financial year 2019/20 budget execution is underpinned by continued buoyant tax collections in April and above budget capital expenditure-an encouraging new normal for Jamaica.
'Consistent with the overall objective of reducing its footprint in the foreign exchange (FX) market and promoting interbank market...