Jamaica’s profit tax jumps 33%

August 1, 2017 by

Minister of Finance Audley Shaw rolling in increased taxes.

Corporate Jamaica paid in $11.15 billion in corporate taxes, to June 2017, a huge 32.9 percent more than the $8.39 billion budgeted, as companies continue to benefit from an improving local economy, with low inflation and increasing demand.
The 2017 intake, translates to a 32.6 percent more than the amount collected in 2016 as businesses post increased profit, from moderate growth in the economy. Government collected $8.4 billion from companies to June 2016, 24.6 percent more than the $6.75 billion projected. In contrast, tax collected from dividend payments surprisingly fell to $229.5 million versus $293.7 million budgeted and $369.2 million collected to June 2016. The reduction for the first quarter of the 2018 fiscal year is likely to be purely one of timing. Dividends paid by NCB Financial Group and Scotia Group would translate to payment of over $400 million in dividend tax. Dividend paid by 4 of the largest listed companies during April and May, show that just over $800 million in tax on dividends should have been paid over to June this year.
The data shows that the budget forecast for the current Fiscal year for corporate tax revenue is in line with the intake for 2016.

Filed Under: Company News, Economy, Feature Stories, General Business News

19,000 newly employed

July 31, 2017 by

The total number of workers employed in March climbed by 19,100 persons to 1,204,800, up from 1,185,700 in December and led to the unemployment rate falling to 12.2 percent.
The current rate declined from 12.7 percent in December last year and 13.3 percent in December 2015 with the number of persons employed then put at 1,163,800.
The job seeking rate is down to 7.8 percent, from 8.1 percent in December and in late 2015 at 8.4 percent. The number of persons unemployed is down to 166,700 from 185,900 in March 2016.
The unemployment rate after it started to rise after rise with the decline in the economy after 2008, peaked 16.3 in March 2013 with 215,100 persons listed as unemployed and 1,107,300 persons employed.

Filed Under: Economy

GOJ runs at surplus for fiscal Q1

July 31, 2017 by

Minister of Finance Audley Shaw carried on from where Phillips left off.

An increase of $7.76 billion in revenues and grants and $1.5 billion fall in expense payments resulted in Government of Jamaica running the country’s finances at a surplus for the 3 months to June, this year.
The surplus of $1.6 billion is $9.3 billion better than the deficit projected at $7.67 billion.
The cost of interest fell $3 billion below forecast to end at $29 billion versus projections of $32 billion. Company profit tax delivered $2.76 billion more revenue than the $8.4 billion forecasted but PAYE brought in $952 million less than the $13.9 billion budgeted. Production and consumption taxes brought in $4.3 billion more than the $41.4 billion planned but imports delivered $478 million less than the $43.96 billion projected, due mainly to a drop of $2.5 billion in Special Consumption tax.
The primary surplus set at $24.4 billion is now at $30.6 billion. Although, the fiscal is running at a surplus ahead of forecast the government borrowed $5.5 billion more than planned and pay back $6 billion less than originally projected.

Filed Under: Economy, Feature Stories Tagged With: , , ,

Jamaica’s Inflation spikes in June

July 24, 2017 by

‘Vegetables and Starchy Foods’ had a strong impact on price movement in June.

The Consumer Price Index for June 2017 increased by 0.7 percent, represented the highest monthly movement for the 2017 to date, a release from the Statistical Institute of Jamaica (Statin) stated.
The rate of inflation for the calendar year-to-date is 2.1 percent, 4.4 percent over June last year, while the fiscal year-to-date rate is 1.1 percent.
According to Statin, the sharp increase in June was due mainly to increases in the index for the three heaviest weighted divisions: Food and Non-Alcoholic Beverages up by 1.1 per cent, Transport 0.4 percent and Housing, Water, Electricity, Gas and Other Fuels up by 0.4 percent. The Food and Non-Alcoholic Beverages division was impacted by the flood rains in mid-May, which disrupted the supplies of agricultural products and resulted in a 3. 7 percent rise in Vegetables and Starchy Foods. The increase in the Transport division was influenced by higher prices for petrol. Increased electricity rates was chiefly responsible for the upward movement in the division Housing, Water, Electricity Gas and Other Fuels, as the class Electricity, Gas and Other Fuels rose by 1.1 per cent. However, the overall movement of the division was tempered by the 1.3 percent decline in the class Water Supply and Miscellaneous Services Related to the Dwelling. Other notable increases were recorded for Restaurants and Accommodation Services, 0.6 percent and Recreation and Culture, 0.4 percent.

Filed Under: Economy Tagged With: , ,

Jamaica’s remittances crawl higher

July 9, 2017 by

Jamaica garnered US$752 million in remittance inflows in the four months to April this year or just 1.7 percent over the same period in 2016. For the similar period in 2016 inward remittances grew 3.5 percent over 2015.

The increase rate pales in comparison to Guatemala which grew of 13.6 percent, El Salvador 10.6 percent and Mexico 6.8 per cent, data from Bank of Jamaica stated.
Outgoing remittances fell 2.7 percent to US$78 million for the 4 months versus the four months period in 2016 and resulted in net inflows of US$674 million for an increase of 2.2 percent or US$14.5 million relative to the previous corresponding period.
The USA, continues to be the main source for remittances with 66 percent, followed by United Kingdom at 11.9 percent, Canada 9.4 percent and the Cayman Islands 6.1 percent. The flows from the Cayman Islands continues to raise concerns as the amounts are out of proportion to the population size of that country.
As large as remittance flows are, data contained in the remittance report for April out of Jamaica’s central bank show a decline in relation to Tourist Expenditure, falling from 95.6 percent in 2014 to 90.3 percent in 2016. The comparison with exports, shows a far differing pattern, with it almost being twice the level of 2016 exports, at 192 percent compared to 149 percent in 2014. As a percentage of imports, remittances have moved to 48 percent versus 37 percent in 2014.

Filed Under: Economy, FX Market

Jamaica just eked out Q1 growth

July 7, 2017 by

Economic activity in Jamaican in the March 2017 quarter was virtually zero, according the data put out by Statistical Institute of Jamaica (Statin), the government body charged to collating economic data on the country. The results are subject to revision with the final out turn likely to be arrived at more than a year from now.
Statin stated that weather conditions affected production in both agricultural and the mining sector in the quarter leading to declines in those sectors.
According to the release by Statin, the economy grew by a mere “0.1 percent in real terms for the first quarter of 2017 when compared to the similar quarter of 2016. This growth was due mainly to a 0.4 percent increase in the Services industries. While there were improved performances in both the Manufacturing and Construction industries.” “The overall goods producing industries declined by 0.9 percent,” the report stated.
All industries within the Services industries recorded higher levels of output with the exception of Producers of Government Services which remained relatively unchanged.

Growth in Manufacturing grew 2.7%.

Increased output was recorded for: Electricity & Water (0.5 percent), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (0.3 percent), Hotels & Restaurants (1.1 percent), Transport, Storage & Communication (0.4 percent), Finance & Insurance Services (1.0 percent), Real Estate, Renting & Business Activities (0.3 percent) and Other Services (0.4 percent). Increase in visitor arrivals and increased activities in the restaurant group positively impacted the Hotels & Restaurants industry. Output of the Goods Producing industries declined by 0.9 percent due largely to a 3.6 percent reduction in Agriculture, Forestry & Fishing and a 9.9 percent decline in Mining & Quarrying.
“The performance of the Agriculture, Forestry & Fishing industry was negatively affected by drought conditions in the south central parishes and heavy rainfall in the North Eastern parishes. The Mining & Quarrying industry was affected by operational problems at one of the factories, heavy rainfall and a loss in the market share from the United States of America for crude bauxite. The Manufacturing industry grew by 2.7 percent and Construction by 0.6 percent. Increased output from the Manufacturing industry was influenced mainly by a 5 percent increase in the Food, Beverages & Tobacco sub-industry. The overall growth in the Manufacturing industry was however, tempered by a 3.4 percent fall in petroleum output. The performance of the Construction industry reflected increased activities in the building construction and building installation sub-groups. The industry continued to benefit from the expansion and renovation in the hotel sector,” Statin said.

Filed Under: Economy, Feature Stories Tagged With: ,

Q1 non-traditional exports surge

July 4, 2017 by

Jamaica’s Non–Traditional Domestic Exports jumped sharply in the March 2017 quarter to almost equal Traditional Domestic Exports with just US$9 million separating the two.
The non-traditional exports was one of the bright spots in the country’s external trade performance which saw the trade deficit widening in the quarter as oil imports almost doubled in the quarter growing by 81 percent.
Non–Traditional Domestic Exports earned US$146 million, a stunning 42 percent or US$43 million increase over the similar 2016 period, this compares with Traditional Domestic Exports during the first quarter which were valued at US$155 million, a mere increase of US$7.7 million or 5.2 per cent over the first quarter of 2016.
The merchandise trade deficit worsened to US$996 million compared to US$795 million in the similar quarter of 2016, the Statistical Institute of Jamaica reported.
The second half of 2017 should see an improvement in traditional exports as the Alpart alumina plant is now back in production.

Filed Under: Economy, Feature Stories Tagged With: ,

Is BOJ planning cut in interest rate?

July 3, 2017 by

Bank of Jamaica is dropping the 30 day repo rate as its policy rate effective July 1st. According to the central bank, “its policy rate will be the interest rate that it pays on overnight deposits held by deposit‐taking institutions at Bank of Jamaica currently 3.75 per cent per annum.”
The overnight rate when annualized, is sharply lower than the 30 days rate which currently sits at 4.75 percent per annum and could well be interpreted as an indication that BOJ is signaling that rates are due to fall. With low inflation currently being enjoyed, revaluation of the Jamaican dollar ahead of increased inflows in the next few months and a healthy Net International Reserves, the time seems almost perfect for the engineering of a cut in interest rates before too long.
The interest rate that BOJ pays on its 30 day certificates of deposit will no longer be designated as the policy rate. Bank of Jamaica will continues to offer 30 day certificates of deposit to primary dealers and deposit‐taking institutions, effective 28 July 2017, they will be issued in fixed volumes by competitive multiple‐price auctions.
According to the Central Bank they are making this change “in order to strengthen the relationship between the policy rate and market interest rates which, in turn, influence the spending and saving decisions made by businesses and consumers. By this means, the Bank is able to influence the rate of inflation in pursuit of the inflation target.
The move comes against the background of Treasury bill rates easing why open market one year rates have climbed to 8.82 percent in the most recent auction held on June 23, with 60 bids comprising $3.49 chasing after $3 million offered, rising from 6.06 percent on May 26 when there were 53 bids going after $2 million and rising to 7.07 percent on June 9 with 37 bids amounting to $2.07 chasing $3 million.
Treasury bills have seen 192 instrument ending mid-June at an average of 6.13 percent compared to 6.10 in May and 6.40 in April and the 91 days T-bill ending at 5.77 percent in June being slightly higher than the 5.65 percent in May.
Rates paid by the deposit taking institutions to the central bank on 14 day repo has fallen from a high of 7.68 percent on March 26, to just 5 percent on April 24 and now sits at 5.84 percent for the June 26 auction as three bidders applied for the funds available.

Filed Under: Economy, Feature Stories

GOJ chops $7.6b off deficit

July 1, 2017 by

Government of Jamaica fiscal deficit dropped by $7.6 billion below budget to end at just $4.2 billion for the first two months of the 2017-18 fiscal year. Unbudgeted inflows of $5.2 billion and reduced expenditure of $1.9 billion versus budget were mostly responsible for the improvement.
The primary surplus projected at $8.2 billion jumped to $15.5 billion with the help of the increased inflows and reduced expenditure.
Corporate taxes accounted for a shortfall of $228 million, PAYE for $568 million tax on interest $272 million, stamp duty $403 million and special consumption taxes on imports $1.1 billion. Categories that out performed are special consumption taxes on local goods $336 million, Education taxes $309 million, GCT on local goods and services $518 million, Custom Duty $348 million, Travel tax $510 million and GCT on imports $376 million.
The collection of PAYE for the two months is running at $8.9 million 30 percent lower than the $12.7 billion the government raked in before the increase in the tax threshold that became effective in July last year for the first tranche. On the other hand, Education tax this year of $4.3 billion, is running 13 percent ahead of the $3.8 billion collected for April and May last year.

Filed Under: Economy, Feature Stories Tagged With: , , , , ,

Inflation rate drops in May

June 16, 2017 by

Inflation in Jamaica after rising 0.4 percent in January and March and 0.3 percent in April has now fallen to just 0.1 percent for May this year, half of the 0.2 percent rise in February.
The increase for May brings the year to date 1.4 percent and the fiscal year-to-date to 0.4 percent. The inflation rate over the last twelve months rose to 4.6 percent. With the price of oil on the world market slipping recently, a low level of inflation can be expected for some time to come and could result in the year over year rate declining form the above level.
According to Statistical Institute of Jamaica the inflation for May is due to an increase of 0.1 percent in the index for the heaviest weighted division, Food, Non-Alcoholic Beverages and Tobacco. Within this division the group Food rose by 0.1 percent while other notable increases were recorded in the following divisions: Transport 0.2 percent, Alcoholic Beverages and Tobacco 1.6 percent and Restaurants and Accommodation Services 0.3 percent. The upward movement in the index was tempered by a 0.2 percent fall in the division Housing, Water, Electricity, Gas and Other Fuels due to lower rates for electricity, water and sewage.

Filed Under: Breaking News, Economy, Feature Stories Tagged With: , ,