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

EXECUTIVE SUMMARYMacroeconomic developments are broadly in line with program projections. There aresigns of a gradual recovery from the effects of the global financial crisis and hurricaneSandy. Real GDP growth for 2013/14 is projected at just under 1 percent, supported byimproved activity in the tourism, mining, and agricultural sectors. Inflation has increased dueto the depreciation of the exchange rate as well as higher administered prices in the contextof the recent fiscal package. International reserves are in line with program requirements,but remain low. The execution of the 2013/14 budget has remained broadly on track. Strongimplementation of the program would lay the foundation for sustained economic growth.Program performance is on track, in spite of the difficult economic environment.Jamaica's four-year, SDR 615 million (225 percent of quota) Extended Arrangement underthe EFF was approved by the IMF Executive Board on May 1, 2013. All end-Septemberquantitative performance criteria and structural benchmarks were met. The macroeconomicoutlook and financing scenario remain broadly in line with earlier projections. Theauthorities are pressing ahead with the next round of reforms, including strengthening thefiscal policy framework, reforming the securities dealers sector, and enhancing publicfinancial management.Program risks. Risk to the program remains high, including possible external shocks, weakconfidence and anemic external demand that could hamper the growth recovery, shortfallsin budget financing and revenue collection, and policy slippages.Appraisal. Based on the performance to date and the authorities' updated policy intentionsand commitments, staff recommends completion of the second review under the EFF.