Economy — Page 34

GOJ income big outperformer

September 1, 2016 by IC Insider.com

The Jamaican government has already covered in just four months, all the revenues that will be lost for the fiscal year even before the revenue lost from the higher threshold, starts to impact the fiscal operations from the increase in the threshold for PAYE contributors.
The data suggests that there is no need for there to be an alarm about funding the additional tax relief in 2017 as the performance to date indicates that the added break will be funded from the 2016/17 fiscal performance.
The savings on the interest cost and the added revenue intake, translate to just about $40 billion for a full year, and this on top of the $13 billion in new taxes the government imposed in May, plus the projection of additional taxes, included in the budgeted projections based on normal annual increase.
With the threshold coming into effect in July, the reduction in taxes to be paid won’t show up until August inflows. Data out of the ministry released on Thursday show revenues $11 billion ahead of projections and spending is down by $14 billion. The reduced spend, includes under spending on capital projects, amounting to $5.8 billion and housekeeping expenses of $3.8 billion.

Collector of Taxes office, Constant Spring, Kingston.

Importantly, interest cost dropped $2.8 billion. The savings on interest and the increased revenues above budget amounts to just under $13 billion, more than the revenues given up by the increased in the threshold, this year. Taxes already applied to raise funds to cover the lost PAYE revenues will be collected in the remaining 8 months of the fiscal year. In effect the government has covered the revenue losses with the performance to July. Collection to be made for the balance of the fiscal year based on the increased taxes that were applied starting in May but with collection starting in June will be available to fund other fiscal endeavours or used to ensure that the fiscal year will end without a fiscal deficit.
There is one factor to be considered, the original budget was projected a fiscal deficit for the year of $17 billion and the focus could be on ensuring that this is wiped out and there is none in 2017/18. The new IMF agreement could have different terms than the very restrictive ones the country has been undergoing over the past 4 years.

Filed Under: Economy, Feature Stories

Price increases slowed in July

August 22, 2016 by IC Insider.com

With more than half of the calendar year gone, overall price movements in Jamaica remained slightly negative at minus 0.1 percent, but inflation for the last twelve months amounts to 2.1 percent, while inflation since April is up 1.2 percent.
The rise in the Inflation Rate since April 2016, emanated mainly from 0.5 percent rise in prices in July 2016, according to the latest figures released by the Statistical Institute of Jamaica and a 0.9 percent movement in June.
July’s prices were mainly impacted by Electricity, Gas and Other Fuels rising 4.6 percent and Water Supply and Miscellaneous Services Related to the dwelling climbing 2.8 percent.

Increased fuel prices added to inflation.

Food and Non-Alcoholic Beverages increased by a mere 0.3 percent due mainly to increased prices for vegetables and starchy foods. Price movements elsewhere for July were mild.
The decline in the price of oil on the world market in recent weeks should have a moderating effect on prices overall in August and September. Regardless, if inflation were to remain at the 0.5 percent per month as occurred in July the country is likely to enjoy one of the lowest year of inflation for some time and Jamaica seems set to report an inflation rate that is below 2 percent for 2016.

Filed Under: Economy Tagged With: BOJ, Inflation in Jamaica, Statin, Statistical Institute of Jamaica

Junior market legislation draft ready

August 15, 2016 by IC Insider.com

A Shaw address ptl Legislation is ready to come to parliament to make the junior market tax incentive retroactive to April 1, this year to restore the incentive to its original benefits of 100 percent tax-free status for 5 years and 50 percent of the regular tax for the second 5 years, Minister of Finance, Audley Shaw recently.
Shaw made the announcement when he delivered the keynote address at the official ground breaking of the Allegheny Petroleum and Paramount Trading joint venture lubricant factory in July to be built at 39 Waltham Park Road in Kingston.
Benefits far out weight the loss in revenues given up by the government, Shaw said. He stated that while corporate taxes were foregone, government saw increased intake from other taxes as a result of the expansion of junior market companies. He indicated that GCT intake grew by 337 percent by junior market companies, with NIS, NHT rising by 100 percent.
“Shaw went on to state that the time for fooling around is long past” we must chart a course to a better future urgently and commended the thrust Prime Minister Holness was pursuing to focussing on growth in an aggressive way. He said that “with 13,000 new hotel rooms to come on stream over the next 5 years that an avenue is being provided for additional goods for the sector to be provided by local goods producers for the sector.”
Shaw commended the joint venture partners and stated that is what he expects to see with a more economically friendly environment that should encourage local production for exports or import substitution.

Filed Under: Company News, Economy, General Business News, JSE Junior Market, Stock Market Tagged With: Allegheny Petroleum, Paramount Trading, Prime Minister Holness

NIR shoots up in July

August 8, 2016 by IC Insider.com

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Net International Reserves of Jamaica shot up by US$124 million in July, to end at US$2.39 billion. The build-up has taken place over the period when bankers purchased US$100 million more than they sold, with the amount climbing to US$116 million up to the first week in August and US$124 million including Monday’s intake.
The reserves are just slightly below the amount of US$2.42 billion it was at the end of March at the 2016 peak, just before the central bank had to intervene by selling to the market with the reserves declining to a low of US$2.265 billion in June, just above the US$2.2 billion at the end of January.
With August being another month when inflows of foreign currency is high, the prospects are good for further build-up of funds in the system, before the end of the month and could place the country’s central bank in full control of the foreign exchange market in the months ahead before the next period of higher inflows starts in mid-December.

Filed Under: Economy, FX Market, Stock Market Tagged With: Bank Of Jamaica, Jamaica's NIR, NIR

No new taxes for Jamaicans

August 3, 2016 by IC Insider.com

Collector of Taxes office, Constant Spring, Kingston.

Earlier this year I stated that government’s $1.5 billion tax plan could be funded from ongoing revenues but others thought otherwise. 2016 fiscal data showed savings on the cost side particularly interest cost reduction and increase revenues that were running above budget.
Based on developments on the fiscal operations this fiscal year, it seems that government was well on the way to enjoying a bumper reaping in 2016/17 fiscal year of higher revenues and lower interest cost that seemed adequate to meet the proposed tax break of the tax free $1.5 billion.
With the first quarter revenues and expenditure in the data is confirming what I was saying and is indicating that the naysayers are far from as informed as some would want the public to believe. What the early data is suggesting is that the economy seems to be performing better than in recent past and more importantly, that there was no need for any new taxes for this fiscal year and none will be needed to fund the rest of the personal tax break to be effected in 2017/18.
The simple reason is, savings on interest cost, with lower interest rates on government debt and an 11 percent rise in revenues over the 2015 intake, equal to an 8 percent increase above budget for the current fiscal year, will translate to $46 billion in added revenues and interest savings over the planned amounts. That will be more than enough to fund the increase tax break to come and to do without the NHT special payment. But that is not all if positive economic growth continues into 2017 revenues will rise some more probably with an additional $30 billion.
What the data is showing, is that the country has been failing from lack of thinking outside familiar territory.

Filed Under: Commentary, Economy Tagged With: GOJ revenues, Taxes

GOJ revenues grow faster than plan

August 2, 2016 by IC Insider.com

Minister of Finance Audley Shaw

Government of Jamaica revenues jumped nearly 6 percent over budget for the first two months of the fiscal year to May, and have seen an acceleration to June with a 7.9 percent increase, bringing the surplus to $8.4 billion with total inflows of $115 billion.
Revenues for the first quarter are running 11 percent or $12 billion ahead of the 2015 first quarter revenues. Recurrent spending dropped sharply by 8 percent against budget to hit $122.7 billion from a budget of $133.5 billion. The net result of the increase in revenues and reduced expenditure is a reduction in the fiscal deficit of just $7.5 billion, down by $26.8 billion projected.
Revenue in take for the two period is just over $9.2 billion or 15 percent ahead of the similar period for 2015. The primary surplus that was budgeted at $11 billion is now at $26.8 billion.
Tax revenues jumped 7.8 percent or $7.9 billion over forecast with the excess over budget flowing mainly from the following, corporation tax of $1.66 billion, PAYE $457 million, local GCT $2.4 billion, local stamp duty $680 million, education tax $300 million. GCT on imports accounted for $1.5 billion of the excess inflows while custom duty chipped in with $422 million but travel tax fell by $380 million.

Collector of Taxes office, Constant Spring, Kingston.

Interest cost fell by $3.5 billion and normal housekeeping expenses is down by $4.7 billion while the wage bill moved up by $936 million. Capital spending was under by $3.7 billion with only $9.6 billion spent to June.
The increase in revenues is in keeping with a trend seen in the first 9 months of 2015 when revenues were growing well ahead of forecast.
The savings in the cost of debt servicing, plus the increased revenues above budget, translate to $11.8 billion or $47 billion over a full 12 months, should the trend continue, well in excess of the cost of the tax break agreed for personal income tax.

Filed Under: Breaking News, Economy, Feature Stories Tagged With: GOJ fiscal deficit, GOJ reveenues, PAYE, Stamp duty, Tax collections

Crude oil falls set for more losses

August 2, 2016 by IC Insider.com

Fuel prices at the pumps in May 2015.

Jamaica and most of the Caribbean excepting Trinidad and Tobago are benefiting from a soft oil market with prices having fallen from a recent high of US$51.23 per barrel in June.
Excess inventories said to be near the 97-year high reached in April and increased drilling has pushed the price down to US$40 per barrel on Monday. Technical indicators point to a fall to the low, between US$35 to US$30, before too long.
Increased drilling and the rise in supplies will add more downward pressure on prices going forward, it will take a very long time for inventories to normalize. Added to this, is the pressure that investors have placed on prices, as they continue to sell oil short, at an increasing pace.
For every US$1 fall in the price, Jamaica will save approximately US$9 million per year. The fall back of oil prices will result in lower electricity and transportation cost for the majority of the region and boost companies profits.

Filed Under: Breaking News, Economy, Feature Stories

Tourism Jamaica’s #1US$ earner

July 31, 2016 by IC Insider.com

Tourism is Jamaica’s largest earner of foreign exchange.

Tourism is now Jamaica’s largest source of foreign exchange earnings, with US$2.4 billion pulled in 2015. Inflows from the sector is growing at nearly twice the pace of remittance inflows, now Jamaica’s second largest, with inflows of US$2.23 billion in 2015, according to data form Jamaica’s central bank, Bank of Jamaica.
During the period of 2008 to 2015, the three main areas of foreign exchange earnings have switched positions between themselves, but since 2012 tourism has been the number one source of inflows and is widening the gap.
Tourism brought in US$1.98 billion in 2008 and remittances US$2 billion. Remittances grew by 10 percent to US$2.2 billion in 2015 over 2008, while tourism was up 18.8 percent to US$2.4 billion. In 2015 tourism inflows grew by 6.4 percent in contrast to the 3 percent increase in remittances. In 2014 tourism inflows grew by a strong 8.7 percent over 2013.
While remittances and tourism have been growing since 2008, exports of goods have gone in the opposite direction with 2015 exports falling to US$1.27 billion versus US$2.974 billion for 2008 for a decline of 54 percent. If the growth trend in tourism inflows continue at the 2015 pace, the sector will exceed the earnings by exports of goods in 2008 by 2018.

Filed Under: Economy, Feature Stories Tagged With: Bank Of Jamaica, FX Market, Jamaica's remittances, Tourism inflows to Jamaica, US Dollar

Jamaica’s remittances up 10%

July 31, 2016 by IC Insider.com

FX_USPound Jamaica enjoyed a strong 10.4 percent growth amounting to US$17.2 million in net remittances in April 2016 to reach US$184 million compared to April 2015. The growth reflected an increase in gross remittance inflows buttressed by a slight contraction in remittance outflows.
Gross remittance inflows for the month were US$203 million, an increase of US$15.5 million or 8.3 percent versus the similar period last year. While the April’s increase climbed sharply over 2015, net inflows for the first 4 months of the year is up just 3.5 percent, reflecting swings in the rate of growth for various months, with January suffering a contraction of 6.4 percent and March rising by just 1.5 percent.
Net remittances for the first four months of 2016 were US$22 million or 3.5 percent above the 2015 period, to end at US$660 million, flowing from an increase in gross inflows, partially offset by an increase in outflows. Total inflows were US$740 million, an increase of US$25 million or 3.5 percent.
In 2015 total remittance inflows, amounted to US$2.23 billion or 3 percent ahead of the amount generated in 2014.

Filed Under: Breaking News, Economy Tagged With: BOJ, Jamaica remittances, Remittances, US Dollar

Business confidence set to recover

July 18, 2016 by IC Insider.com

Business confidence levels dipped in May this year, as measured by the Bank of Jamaica Perception of Present and Future Business Conditions survey and by the stock market movements. The local stock market has since rebounded and is close to its historic peak at Mid July, an indication that business confidence levels are set to rebound when measured in the summer months.
No new data is out from Jamaica’s central bank, of the latest levels. With the stock market having been rebounding, government fiscal program ahead of target and the Jamaica dollar settling down recently, the prospect of a rebound in survey numbers seems to be on the cards. Historical data indicate that the stock market is one of the best measure of business confidence levels, with the chart showing how closely the market index tracks the movement of future business confidence.
According to the survey findings, the perceptions of both present and future business conditions moderated compared to the record highs of the previous two surveys (see chart). Notably, the index of present business conditions fell 6 percent to 213.1 from the 226.1 attained in the previous survey. The index of future business conditions declined more slowly than the current measure by 2.6 percent from 171.5 in the previous survey to 167.1.
Both indices reflected declines in the proportion of respondents of the view that conditions were or will be “better.” In addition there were increases in the number of respondents indicating that conditions were or will be “worse.” There was, however, an increase in the proportion of respondents that indicated that conditions were or would be ‘about the same’ for both indices.