Jamaican government’s tax revenues, were on target for the first 4 months of the 2014/15 fiscal year, coming in just $611 million short of the target of $112.23 billion.
Only $609 million was collected in grants, as this category fell nearly $3 billion short of target. Overall, total collections, amounted to $121.8 billion, short by $2.6 billion for the period. For the similar period in 2013 inflows amounted to $118.7 billion.
Expenditure fell by a much larger amount than inflows, at $7.7 billion to end at $139.7 billion. Lesser amounts than budgeted were paid out for wages, interest, general and capital expenditures. Government only paid $7.8 billion on the capital side, versus $12 billion budgeted. Reductions of payments were, $737 million for general expenses, wages $1.2 billion and interest $1.6 billion.
The fiscal deficit, improved by $5 billion over target, to reach $18 billion, while the primary surplus was $3.6 billion better than planned. At the same time last year, the deficit was only $5.7 billion and the primary surplus $25 billion or $4.7 billion ahead of target.
GOJ Tax revenues on target
Trade balance maintains improvement to May
Jamaica’s trade deficit narrowed between January and May this year, compared to the same period in 2013 by US$125 to US$1.78 billion. For the same period last year, the trade deficit narrowed by just US$36 million.
The 2014 improvement emanated from imports of US$2.4 billion, a decrease of US$224 million or 8.5 percent and exports of US$616 million, down from US$715 million for the comparable 2013 period. The value of exports fell by US$99 million or 13.9 percent. Decline in fuel, food and beverage imports accounted for the bulk of the decline and alumina exports accounted for 14 percent of the export decline and non-traditional exports the rest.
Imports| Mineral Fuels import amounted to US$856 million, compared to the US$966 million for the January to May 2013 period. Imports of Raw Materials and Intermediate Goods fell to US$1.45 billion, a decrease of US$265 million or 15.4 percent. Imports of Other Fuel and Lubricants with the US$513 million was lower than the US$576 million recorded for the similar period of 2013, with a decline of US$63 million or 11 percent. Crude Oil imports at US$342 million, moved from US$389 million in the similar period of 2013, a fall of US$47 million or 12 percent.
Industrial supplies declined by US$146 million to US$350 million and Food and Beverages fell from US$146 million in the 2013 period to US$129 million. Capital Goods excluding Motor Cars increased moving from US$203 million to US$218 million in the current January to May 2014 period. Machinery and Equipment was the main contributor to the increase in this group moving up by 18.4 percent to US$121 million.
Traditional exports declined by 4.7 percent to US$327 million for review period versus the previous 2013 period due mainly to a decline in Alumina of US$13.5 million. Non-traditional exports decreased during the January to May 2014 by US$81 million or 23.7 percent to US$259.9 million. Statistical Institute of Jamaica (Statin) who compiled the data did not state which item accounted for the largest portion of the decline. Previous information indicate that export of ethanol fell sharply due to low demand in the USA market for the product.
Ja interest rates on slow downward drift
Rates on Government of Jamaica Treasury Bills, have been on a slow drift downwards from levels attained earlier this year. The trend is expected to continue while the rate of exchange for the local dollar, remains fairly stable and inflation is kept under control.
The Treasury bill for the period Friday, August 22 to maturity on Friday, November 21 this year, for the duration of 91 days, attracted bids of $639,068,500, (July $732,981,900) for the $400,000,000 on offer, to yield an average of 7.46767 percent, down from 7.63643 percent average rate out turn in July. The arte for the June issue was 7.65893 percent and in May, the rate was 8.2 percent for the Treasury bill of same duration.
The offer for 182 days duration, matures on February 20 next year and will generate an average interest rate yield of 8.11578 percent down from 8.21982 percent at the July’s auction and 8.36502 percent for the June issue of the same duration. At the May Treasury bill auction, the rate came out was 8.932 percent. $745,290,300 went after the $400 million offered for the latest issue.
New BOJ CDs| At the same time, Bank of Jamaica is offering both US dollar denominated medium term Certificate of deposit instruments and local Jamaica dollar instrument to the market. The US dollar bonds are for an unlimited amount and will pay interest semi-annually.
The offerings are, BOJ FR USD-CD 2018K is for a duration of 4-years at a fixed coupon of 4.50 percent per annum. (ii) The offer of BOJ FR USD-CD 2019G is for 5-years and offers a fixed coupon of 5 percent per annum. (iii) The offer of BOJ FR USD-CD 2021 is for an unlimited amount. The tenor of this instrument is 7-years and offers a fixed coupon of 5.50 percent per annum.
(iv) The offer of BOJ VR-CD 2015AE is for an unlimited amount. The tenor of this instrument is 364-days. The instrument re-prices semi-annually at 0.25 percentage point above the six month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first six months will therefore be the six month GOJ Treasury Bill rate of 8.12 per cent, plus 0.25 percentage point.
Jamaica’s Inflation jumps for July
The inflation rate for July 2014 jumped by 1.4 percent, the highest rate recorded since September 2013, the Statistical Institute of Jamaica (Statin) reported.
According to the report put out by the body charged by the Government of Jamaica with data collection, Statin, “contributing to the rise in inflation, were increases in the cost of some agricultural products as the drought affecting most of the island, resulting in a shortage in supply. The highest weighted division ‘Food and Non-Alcoholic Beverages’ increased by 2.0 percent with the classes ‘Vegetables and Starchy Foods’ moving up by 6.3 per cent and ‘Fruit’ by 5.8 percent.”
Since the start of the year the monthly inflation rates are Feb 0.1 percent, March 1.1 percent, April, negative 0.3 percent, May 1.0 percent, June 0.1 percent and July 1.4 percent. The movement in the index up to June this year is for an inflation rate of 2.5 percent, with the July included, the year to date is now at 3.9 percent. The impact that drought is said to have on the rate could subside in the latter months of the year thus allowing food prices to moderate and bring down the monthly rate of increase going forward.
Jamaica’s NIR passes US$2b
Jamaica’s Net International Reserves (NIR) now exceeds US$2 billion as it sits at US$2.18 billion, up by US$805 million during July. The increase reflects the US$800 million bond, the government raised recently on the international market.
The gross amount of the reserves is US$2.8 billion, up by US$793 million during July, of this amount US$606 million is due to the International Monetary Fund (IMF) and represents primarily, funds obtained from the IMF for liquidity support for the financial system, when the JLP government undertook the first debt exchange, back in 2010.
Reserves of Goods Imports amount to 28.13 weeks and 20.30 weeks of Rreserves of Goods & Services Imports.
Jamaican Government revenues short $3.5b
A $2.5 billion shortfall in the collection of company tax and a $2 billion shortfall in the collection of grants, offset by some areas that over performed, resulted in the overall tax take for the first 3 months of the 2014/15 fiscal year to June, falling short of budget by $3.5 billion revenues.
On the expenditure side, reduced payments of $2.3 billion for non-wages and interest and a billion less in the wage bill, coupled with a $3 billion reduced capital spend, helped to cut expenditure by $6.3 billion, leaving the fiscal deficit better off by $2.8 billion.
Revenues came in at $93 billion for the three months and expenditure at $110 billion, for an overall fiscal deficit of $17 billion.
Areas of revenues that were major out performers are, PAYE with $578 million or 3.6 percent, tax on dividends, $100 million or 24 percent, tax on interest, $726 million or 255 percent, special consumption tax on local goods $737 million or 27 percent, education tax, $231 million an increase of 5 percent.
Local GCT fell sort by 5.5 percent amounting to $792 million, GCT on imports fell short by 5 percent or $723 million.
Little change in employed in March
Jamaica’s unemployment rate drops to 13.6 percent in March compared to March last year, according to data released by the Statistical institute of Jamaica (STATIN), but the rate is worse than it was in December last year. 
The unemployment rate in December was 13.4 percent according to Statin data for that period. There were 1,133,000 employed persons in March this year, which was 25,700 more than the 1,107,300 recorded in April 2013, the Statin labour report said, the March 2014 numbers are only a marginally better than the 1,130,500 persons employed in December last yea.
According to the Statin data, the country’s labour force in March was 1.311 billion persons down from 1.322 billion in Match 2013 as 11,300 persons exited the work force over the one year period, the report stated. At the same time 25,700 persons found work across a wide cross section of the work force. The number of persons classified as outside the Labour Force was 769,900 In March 2014 and an increase of 16,200 over 2013.
Who got jobs?|The Occupation group ‘Elementary Occupations’ increased by 18,200 persons or 12.8 percent, moving from 141,700 in April 2013 to 159,900 in March and the group, ‘Professionals, Senior Officials and Technicians’, increased from 241,900 persons in March 2013 to 251,700 persons (4.1 percent). The group ‘Craft and Related Trades Workers’ had the largest decline for the period, moving from 139,300 in March 2013 to 134,700 in 2014, resulting in a decline of 4,600 (3.3 percent) persons.
The number of persons employed in the ‘Hotels & Restaurants Services’ increased by 9,100 (13.4 percent) persons while the group ‘Transport, Storage and Communication’ increased by 7,300 (10.5 percent) persons.
Argentina’s recent debt default -consequencies
The government of Argentina has defaulted its public debt – yet again. It is bound to have unfavourable consequences for the people of Argentina, who are likely to see their currency lose value, and many will lose their jobs.
Argentina’s vineyard
“The current political situation in Argentina is also looking positive: Mrs. Kirchner’s, the country’s president’s popularity is at an all-time low, she can’t be re-elected, and doesn’t have the power to nominate her successor” Steve Rosberg, an Argentinian resident stated. Rosberg goes on to state that “as a result, and as a reaction of her leftist rhetoric and the current crisis, the four most probable candidates – those who have real chances of being elected – are all market friendly, and of a centre to centre-right inclination. They are all likely to make the necessary reforms to get out of this default, and to pursue foreign investment. We believe they don’t really have a choice, except in a matter of degrees. It has been a slow and painful decade with the Kirchners, who are leaving the country pretty much in the same condition they found it in 2003. Now, like then, there will be great opportunities to invest in Argentina”.
Jamaica’s trade deficit falls, March’s better
Jamaica enjoyed a reduction in its trade for the first four months of this year, compared with the same period in 2013. The trade deficit amounted to US$1.34 billion, down from US$1.46 billion in 2013.
The country imported goods valued at US$1.86 billion for the January to April 2014 period, a decrease of US$199 million or 9.7 percent and exported US$77 million or 12.9 percent less for the January to April 2014 period, representing a big improvement over the change to March. Total exports for the 4 months came in at S$521 million, down from US$598 million in the similar period in 2013.
For the three months to March this year, imports fell by US$281 million and exports were down US$111 million to US$358 million, down from US$469 million in the 2013.
Treasury bill rates edge down
The Government of Jamaica Treasury bill offer for the period Friday, July 25 maturing on Friday, October 24 this year for duration of 91 days, attracted bids of $732,981,900 for the $400,000,000 available.
The yield cane out at an average of 7.63643 percent. The result represents a small reduction from the 7.65893 percent yield, emanating out of the previous issue of a similar duration in June. In May, the rate was 8.2 percent for the Treasury bill of same duration. $832,672,600 went after the 400,000,000 Treasury bill instrument on offer. The offer which is of 182 days duration, matures on January 23 next year and will generate an average interest rate yield of 8.21982 percent versus the 8.36502 percent for the June issue of the same duration. At the May Treasury bill auction, the rate came out was 8.932 percent.