Jamaica: First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria

Extended arrangement. On May 1, 2013, the IMF Executive Board approved a request bythe Jamaican authorities for a four-year Extended Arrangement in an amount of SDR 615.38million (225 percent of quota) with a first purchase equal to 50 percent of quota.

Economic developments. Growth has remained anemic in the aftermath of hurricaneSandy and the subsequent drought, while inflation has picked up, in part due to the passthroughof further depreciation of the exchange rate. International reserves increasedconsistent with program requirements, but remain low. The debt exchange has notundermined market stability, but public debt, as envisaged, remains at a very high level, at146 percent of GDP.

Main elements of the program review:

All end-June quantitative conditions and all structural benchmarks were met. The 2013/14budget is in line with the program.

Economic developments remain in line with program assumptions and the macroeconomicoutlook and financing scenario remain broadly unchanged from the program approval.

The authorities have committed to press ahead with the next round of reforms, includingthe establishment of a fiscal rule, and comprehensive tax reform.

Risks to the program remain high, including possible external shocks, a delayed growthrecovery, shortfalls in budget financing, and policy slippage.

Appraisal. Based on the performance to date and the authorities' updated policy intentions,staff recommends completion of the first review under the EFF.