BOJ — Page 83

GOJ’s program for reduction & growth

January 26, 2014 by IC Insider.com

The principal objective of the Government of Jamaica’s programme is to reduce the national debt and raise the sustainable growth rate of our national output.

The governor of the Bank of Jamaica, Bryan Wynter, stated in a recent address at a JMA’s 2014 Economic Forum, that the Government has committed to implementing revenue, expenditure and debt management measures to ensure that the debt goes down in relation to GDP. This commitment entails the achievement of annual primary surpluses of 7.5% of GDP over the life of the programme. The governor went on to outline other measures that are to be put in place to achieve the main objectives.

“With this,” he stated, “the borrowing need of the Government has fallen sharply, which is leading to a steady reduction in the debt to GDP ratio to below 100% by 2020. Government intends to make the current fiscal responsibility framework stronger by developing binding fiscal rules. This will increase transparency, lock in the gains of fiscal consolidation and ensure that budgets will be sustainable even beyond the end of the four-year IMF agreement.

Image courtesy of arztsamui/FreeDigitalPhotos.net

“A central plank of the programme is the implementation of structural reforms aimed at creating an environment supportive of economic growth. One of the main structural reforms to which the Government has committed is the improvement of the tax system, including tax administration.

“Fiscal incentives legislation was also passed in December which overhauls and simplifies decades of tax law to the advantage of productive businesses.

“To kick-start growth, the government has started to implement catalytic, strategic, public-private investments. Already, the government has initiated production in six agro-parks, aimed at import substitution. The objective is to develop a total of nine such parks by the end of 2014.

“The GOJ is also committed to improving the competitiveness of the economy through legislative and administrative changes. Additionally, amendments to the Companies Act were passed which streamline the business registration process through the use of a multi-purpose registration instrument. A bill to modernise our bankruptcy rules, the Insolvency Bill, was also tabled in Parliament.

“The Government is in the process of establishing a Port Community System to electronically integrate and streamline export and import procedures. It is also moving to establish more flexible work arrangements and improve access to skills training. Furthermore, initiatives to achieve energy diversification and conservation are in progress.

“Supporting these reforms will be the preservation of a stable macroeconomic environment through sound monetary and fiscal policies. Inflation is expected to decline over the medium term towards our long-run objective. This decline in inflation, in conjunction with a more competitive exchange rate, will foster increased price competitiveness of Jamaica’s exports of goods and services.

“Lower inflation will also allow Jamaican businesses to finance investments at lower interest rates. The reduction in fiscal deficits and the public debt will make more resources available to the productive sector and will complement Bank of Jamaica’s thrust to maintain single-digit inflation.

“The Government also committed to undertaking reforms which will increase the efficiency and competitiveness of the financial system and credit market. You may have seen in the media recently, where we committed to a timetable for raising the cap on investments in foreign securities from 5% of assets to at least 25% by end-2015 and removing it by end-2016, unless extraordinary circumstances require a reassessment. The drafting of Jamaica’s Omnibus Banking statute, which includes regulations to give consumers increased protection and to underwrite the regulatory basis for agency banking, is far advanced.

“We are confident that we will be successful with the December test both with respect to the structural benchmarks and the quantitative performance criteria. More importantly, the Government is already looking ahead to the coming fiscal year with a view to crafting policies and commitments aimed at further improving the business climate in Jamaica and securing stronger growth.

“The economy began its recovery during the September quarter, registering growth of 0.5 per cent. We expect that growth of a little under 1.0 per cent will materialise for the fiscal year, in line with our projections.

“As the economy stabilises, the fiscal and external balances improve and the debt ratios are brought down towards sustainable levels, we should see the Government being able to address more effectively important social and developmental issues such as education and training and crime and social peace.”

Filed Under: Economy, Feature Stories Tagged With: BOJ, Economy, GOJ, IMF

October remittances up

January 24, 2014 by IC Insider.com

Net remittances into Jamaica grew by 7.8 percent for October last year to US$152 million, an increase of US$11 million over the same month of 2012 while gross inflows grew by 4.5 per cent or US$7.4 million to US$171 million. Remittance outflows actually declined for the period.

The rise in total remittance inflows reflected an increase of US$8 million in inflows through Remittance Companies and a decrease of US$0.5 million in inflows of Other Remittances.

Net remittances for January to October 2013 were US$1.5 billion, a growth of US$34 million or 2.3 per cent over 2012. The outturn for the review period reflects an increase in gross remittance inflows and a contraction in outflows.

For the review period, total remittance inflows were US$1.7 billion, an increase of US$14 million or 0.8 per cent. The increase in total remittance inflows reflected an increase of US$13 million in inflows through Other Remittances and an increase of US$0.7 million in inflows via Remittances Companies.

Related posts | Remittances inch up | BOP improvement for Q3 confirmed

Filed Under: Economy, FX Market, Stock Market Tagged With: BOJ, Economy, FX Market, Remittances

Interest rate eases

January 17, 2014 by IC Insider.com

Rates on the most recent Treasury Bills fell in the latest offering by the Government of Jamaica.

The rate for the January Treasury bill came out at 6.12 percent compared to 6.2522 percent in December. Investors on Wednesday, 15 January, applied to purchase $400 million 30 days Government of Jamaica Treasury Bills dated Friday, 17 January 2014. This resulted in the average yield of 6.11877 percent. However, yield went as high as 6.29577 percent. A total of $567,065,100 was submitted by applicants in their bid to obtain the instruments.

Related post | T-bill rates mixed at auction

Filed Under: Economy Tagged With: BOJ, Economy, GOJ, TBills

BOJ ups FX market activity

January 16, 2014 by IC Insider.com

During January there were some days of unusually high levels of selling of foreign exchange, which were well in excess of the amounts bought. These increased levels points to the country’s central bank having some input into the trades.

IC Insider made contact with Bank of Jamaica who provided the following response.

“Since the start of January 2014 to the 10th, BOJ’s purchase of foreign exchange from the market was a daily average of US$9.95 million. This compares with a daily average of US$8.74 million for December 2013. However, the average daily sales to the market (public sector entities) was US$11.12 million compared to US$2.0 million in December”.

Filed Under: FX Market, Stock Market Tagged With: BOJ, Daily Trading, FX Market, TTSE

BOP improvement for Q3 confirmed

January 13, 2014 by IC Insider.com

Provisional data for the September 2013 quarter shows that there was a significant improvement in the current account deficit of Jamaica’s Balance of Payments. The outturn in the quarter reflected improvements on all sub-accounts. However, net private and official capital inflows were insufficient to finance the deficits on the current and capital accounts for the September 2013 quarter, which was funded by Bank of Jamaica from the net international reserves.

The central bank, in a release on the current account, stated that it “recorded a deficit of US$409 million for the period July to September 2013, an improvement of US$202 million over the corresponding period in 2012”. This outturn, the release stated, “reflected improvements on all sub-accounts but was primarily evident in a decline of US$146 million in the deficit on the merchandise trade sub-account, associated with a contraction of US$197 million in imports, there was a reduction of US$51.5 million in exports. The decline in imports mainly reflected reductions of US$132 million and US$73 million in expenditure on chemicals and mineral fuels, respectively. For exports, the fall was mainly due to lower earnings from chemicals, in particular, ethanol”.

For the quarter, there was a decline of US$8 million in the deficit on the income sub-account stemming mainly from a decrease of US$20 million in investment income outflows. The decline in investment income outflows was largely related to lower remittances of direct investment companies. With regard to the services sub-account, there was an increase of US$5 million in the surplus due principally to a decline in transportation charges as a result of the lower imports. The surplus on the current transfers sub-account increased by US$44 million reflecting growth of 6.2 per cent in gross remittance inflows.

Related post | Balance of payment improves

Filed Under: Economy Tagged With: BOJ, Economy, GOJ, Remittances

Remittances inch up

January 8, 2014 by IC Insider.com

Remittances is an important source of foreign currency for Jamaica and many parts of the Caribbean basin countries. The data made public by Bank of Jamaica for the year to September reflects moderate growth.

Net remittances for January to September 2013 were US$1 349 million, which represented a growth of US$23 million or 1.7 per cent relative to 2012. The outturn reflects an increase in gross remittance inflows and a contraction in outflows. Total remittance inflows were US$1,532 million, an increase of US$7 million.

What the report has failed to indicate that the lower than normal growth is not necessarily an indication of worsening economic conditions in the source countries. In fact North America, from which the bulk of flows emanate, has been showing growth in the economy.

Limited studies done by the Investors Choice going back to 2008-09 indicates a strong correlation between exchange instability of the Jamaican dollar with a reduction in inflows. It should come as no surprise that some funds that would normally flow into the formal system have in fact been diverted thus reflecting what may be considered lower inflows. In the first 4 months of 2013 when there was scarcity of foreign exchange in the system, remittances actually declined compared with 2012, while in 2012 for the same period, remittance increased during a period when foreign exchange was easily available.

Filed Under: Economy, FX Market, Stock Market Tagged With: BOJ, Economy, Remittances

Business confidence drops 24%

December 17, 2013 by IC Insider.com

Confidence level, which was at its highest for 2013 in September at 87.4 versus a low of 47.5 in April, dropped sharply in October to 66.5, a 24 percent fall.

Persons in the business sector were asked, “In general, do you think business conditions are better or worse than they were a year ago in Jamaica?” The survey was carried out on behalf of Bank of Jamaica.

Perceptions about future business conditions also fell but not as badly as for current conditions. The responses in September saw the highest reading for the year at 116.6 but it fell sharply to 98.6 in October a 15.5 percent fall. The findings are in response to the question “Do you think that in a year from now business conditions will get better or get worse than they are at present?” Although the survey did not give reasons for the decline, it seems to coincide with the falling rate of exchange of the local dollar and high inflation as well as the view that there is likely to be a 6 percent fall in the value of the Jamaican dollar a year from October this year.

The Statistical Institute of Jamaica (STATIN) undertakes surveys of businesses on behalf of the Bank of Jamaica to ascertain the expectations of economic agents about variables which are likely to have an impact on inflation in the near-term. In this regard, the survey captures the perception of Chief Executive Officers, Managing Directors and Financial Controllers about the future movement of prices, current and future business conditions and the expected rate of increase in wages/salaries. The most recent survey was conducted in October 2013 and had 300 respondents.

Filed Under: Economy Tagged With: BOJ, Economy, Statin

Remittances keeps growing

November 26, 2013 by IC Insider.com

Net remittances for August this year increased by US$7.6 million or 5.2 percent to US$155.5 million relative to August 2012. The growth reflected an increase in gross remittance inflows as outflows remained flat at US$22.3 million.

Gross remittance inflows for the month were US$178 million, an increase of US$7.6 million or 4.5 percent versus the same month last year. Inflows were above the average of US$164 million for the previous five corresponding periods. The rise in total remittance inflows reflected an increase of US$8.3 million in inflows through Remittance Companies and a decrease of US$0.7 million from other inflows.

Image courtesy of Marcus/FreeDigitalPhotos.net

Net remittances for January to August 2013 were US$1.2 billion, which represented a growth of US$18.8 million or 1.6 percent relative to 2012. The out-turn for the 8 months period reflects an increase in gross remittance inflows and a contraction outflows.

For the year to August, total remittance inflows were US$1.37 billion, an increase of US$2.8 million and was were marginally above the corresponding pre-crisis (2008) out-turn.

The increase in total remittance inflows reflected a US$10.0 million or 5.1 percent growth in inflows through Other Remittances, which was partly offset by a US$7.3 million or 0.6 percent reduction in flows through the Remittances Companies.

Image courtesy of Marcus/FreeDigitalPhotos.net

Filed Under: Economy, FX Market, Stock Market Tagged With: BOJ, Economy, Remittances

Balance of payment improves

November 19, 2013 by IC Insider.com

Jamaica’s central bank, Bank of Jamaica, is reporting that the country’s Current Account deficit for January to June 2013 improved by US$268 million to US$519 million compared to the corresponding period in 2012. The outturn for the review period represents a continuation of the improvement in this indicator since 2011 the report said. The enhanced outturn for the six months period to June emanated from all sub-accounts, mainly Goods and Primary Income (formerly Goods & Services) which improved by US$141 million and US$50 million respectively.

Change in presentation | The Balance of Payments (BOP) has been modified from what used to be published in the past. The major change in presenting the report is that the Capital Account will no longer be grouped with the Financial Account, but with the Current Account instead. The overall balance from the Current and the Capital account is now referred to as Net Lending or Borrowing. Also, the use of debits and credits for the Financial Account is replaced by Net Acquisition of Financial Assets and the Net Incurrence of Liabilities. There is also introduction of categories of Primary and Secondary Income, which are conceptually consistent with the System of National Accounts (SNA). Primary Income encompasses returns that accrue to institutional units for their contribution to the production process or for the provision of financial assets and renting of natural resources, while Secondary Income represents Current Transfers between residents and non-residents.

Goods producing | For the Goods sub-account, the deficit improved by US$1401 million to US$1.899 billion, versus the corresponding period in 2012. Imports of Goods fell by US$133 million to US$2.779 billion, primarily driven by a US$218 million decrease in Mineral Fuel imports and partially offset by a US$132 million increase in Chemical Imports. Imports of food decreased by US$37.0 million in the period.

Goods Exported increased by US$7.5 million to US$880 million, primarily as a result of a US$66 million increase in Chemical Exports, particularly ethanol.

The balance on the Services sub-account increased by US$50 million to US$453 million for the review period. This resulted primarily from an improvement of US$48 million in the net inflows to the insurance and pension services accounts.

The Primary Income sub-account improved by US$50 million during the review period. This emanated primarily from a US$83 million increase in net investment income flows. Relative to the corresponding period in 2012, the balance on the Secondary Income sub-account improved by US$27 million to US$1 054.1 million. The improvement mainly resulted from a US$18 million increase in the net flows to Financial Corporations, Nonfinancial Corporations, Households, and Non-Profit Institutions Serving Households.

The deficit on the Capital Account improved by US$6.4 million to US$7.7 million for the review period. This outturn together with the balance on the Current Account yielded a net borrowing position of US$527 million, an improvement of US$273.9 million relative to the January-June 2012 period.

The Financial Account recorded a net borrowing position of US$197.4 million, an improvement of US$278.6 million compared to the corresponding period of 2012. The largest contributing subcomponent of the net borrowing balance was Other Investments, which had a net borrowing balance of US$181.2 million. This was primarily due to a decline in the net acquisition of loan assets by US$369 million, coupled with an increase of US$253.8 million in the net incurrence of loan liabilities.

Flows from official and private sources were insufficient to finance the net borrowing balance from the Current and Capital accounts; consequently, the NIR declined by US$100.0 million for the review period.

Related posts | Non-Traditional exports up | NIR up in September

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Filed Under: Economy Tagged With: BOJ, Economy, GOJ

Businesses see J$ at $110 late 2014

November 19, 2013 by IC Insider.com

According to a survey undertaken by Bank of Jamaica in September, senior officers in the business sector anticipate an upturn in the pace of depreciation of the Jamaican dollar for the 3-month, 6-month and 12-month periods beyond the survey date.

This was relative to the August 2013 survey, which showed a lower expected pace of depreciation over all the time horizons. In the September 2013 survey, the exchange rate was expected to depreciate by 1.8 percent, 3.0 percent and 4.7 per cent for the 3-month, 6-month and 12- month horizons, respectively.

By comparison, the August survey had expected depreciation of 1.5 per cent, 2.6 percent and 4.3 percent over the respective horizons.

If the expectations of the interviewees were to materialise, then the exchange rate would be around J$110 to the US dollar but then that is not quite consistent in the September 2013 survey where the respondents’ expectation of inflation 12-months ahead increased to 10.4 percent in the September 2013 survey, relative to 10.3 per cent in the August 2013 survey. This inflation expectation would suggest an exchange rate adjustment closer to 7 or 8 percent.

The Statistical Institute of Jamaica (STATIN) undertakes surveys of businesses on behalf of the Bank of Jamaica to ascertain the expectations about variables which are likely to have an impact on inflation in the near-term. In this regard, the survey captures the perception of Chief Executive Officers, Managing Directors and Financial Controllers about the future movement of prices, current and future business conditions and the expected rate of increase in wages/salaries.

Filed Under: Economy Tagged With: BOJ, Economy, FX Market, Statin