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.
Better fiscal out turn to February
The Government of Jamaica bettered the fiscal out turn to February by $2.9 billion compared to the budgeted target. The improved performance was the result of revenues for the 11 months declining by $18 billion versus the budgeted amount of $354 billion and expenditure was down as well by $20.9 billion.
For the year to date, revenues are 12 percent ahead of 2013 fiscal year out turn of $336 million. With the March figures to be reported in April, revenues for the full year should increase to end in line with the growth to date and be around $385 billion compared with $344 billion at the end of March last year, assuming no major unexpected inflows.
The results to date, along with the March inflows and with the target of a primary surplus of 7.5 percent for the fiscal year, should result in the fiscal out turn ending in surplus for the first time in many years. At the end of February, the primary surplus was at $78 billion or $34 billion below the target of $111 billion set at the start of the fiscal year. Achieving this target would result in a surplus of $10 billion.
On the surface there will be concerns that revenues for February at $31.3 billion are lower than for 2013 at $31.5 billion in spite of the increased levy of new taxes at the start of the fiscal year. The apparent poor performance in February this year is due to a big intake of $6.4 billion in withholding taxes on interest, while the 2013 figures include just $2 billion. But for this big one-off inflow, the 2013 revenues would be up 7 percent. Tax revenues are up by $27 billion or 10 percent for the eleven month period with the exclusion of withholding tax on interest.
Related posts | Ministry confirms deficit wipe out | Fiscal deficit improvement continues
Economy grew in 2013 but barely
Jamaican economy was able to eke out 0.2 per cent growth in 2013 compared to the previous year, preliminary estimate from the Statistical Institute of Jamaica (STATIN) shows. The moderate growth rate, which could be revised later, emanated from growth of 1.8 per cent in the fourth quarter of 2013 compared to the similar quarter of 2012. The fourth quarter growth rate is the strongest for some time but it represents recovery from a period in 2012 when economic activity was negatively affected by Hurricane Sandy.
The economy recorded a growth of 0.5 per cent in the third quarter of 2013 compared to the similar quarter of 2012. Earlier in the year, Statin reported that the Jamaican economy declined by 0.1 per cent in the second quarter and declined by 1.3 per cent in the first quarter of 2013. The country has not enjoyed much growth from 1999 has is shown by the table below.
Growth in the 2013 final quarter resulted from increased output levels in both the Goods Producing industries and Services industries, Statin said.
Statin stated that “the performance in the Goods Producing industries reflects increased activities in Agriculture, Forestry & Fishing (13.1 per cent), benefited from favourable weather conditions, Mining & Quarrying (12.1 per cent) resulting from increased capacity utilization at the bauxite and alumina plants and Construction (2.6 percent) due to an increase in residential housing projects and continued expansion in hotels. Manufacture industry declined by 0.8 per cent”.
All industries within the Services industries recorded increased levels of output with the exception of the Producers of Government Services which declined by 0.2 per cent and the Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment, which remained relatively unchanged for the period. Higher output levels were recorded for: Hotels & Restaurants (5.5 per cent), Transport, Storage & Communication and Other Services (1.1 per cent), Electricity & Water Supply (1.0 per cent), Finance & Insurance Services (0.4 per cent), Real Estate, Renting & Business Activities (0.3 per cent).
Related posts | Economy declined 0.1% in Q2 | Statin confirms growth of 0.5%
BOJ suggests FX stability close
Bank of Jamaica, in an unusual weekend press release, indicated that positive trends in the economy and increased flows of foreign exchange in March over the first two months of the year will provide an increasingly solid base for improved stability in the foreign exchange market.
“Since the beginning of March 2014, the exchange rate has depreciated by J$0.93 (0.85%) against the US dollar. This movement over the two-week period compares to a J$0.49 (0.45%) depreciation over the previous two weeks. The faster pace of depreciation has occurred despite increased supply in the foreign exchange market, where volumes from earners for the month to date, are higher than for January and February 2014.” the central bank stated in a release this evening.
“Jamaica’s main economic indicators continue to improve with economic growth resumed in the September quarter and is expected to strengthen over the subsequent six months in the range of 1.0 per cent to 2.0 per cent. Preliminary estimates of the balance of payments indicate that the current account deficit was reduced sharply over the period April 2013 to September 2013, by approximately US$350.0 million. The current level of net international reserves (NIR) is US$1,121.4 million, increasing by US$52.0 million since the end of February 2014. Bank of Jamaica now expects to comfortably meet the NIR target under the International Monetary Fund agreement for the March 2014 quarter. Finally, headline inflation was lower than projected at 0.5 per cent for the month of January and the fiscal year to March 2014 is now likely to fall close to or below the bottom of the 8.5 per cent to 10.5 per cent target range. The BOJ stated that against the background of recent movements in the exchange rate, they wish to assure the public that it stands ready to provide support to prevent disorderly conditions from emerging in the foreign exchange market.” the release concluded.
Jamaica’s trade deficit improves
Jamaica’s trade deficit improvement experienced a recovery in the year to November 2013 as both imports, which fell by US$392 million and exports, down by US$112 million, resulted in the deficit falling by 6.2 percent or US$289 million when compared to the similar period in 2012.
Overall, imports for the 11 month period in 2013 was US$5,664 million, down from US$6,056 million for the same period in 2012 and exports of US$1,442 million, resulted in a trade deficit of US$4,221 million as reported by the Statistical Institute of Jamaica (STATIN).
Imports | Freezone activity accounted for US$295 million in imports, compared to US$352 million in the corresponding 2012 period. The category of Mineral Fuels, which accounts for 35 percent of the country’s import bill, fell by US$229 million to US$1,984 million compared to the same period of 2012. Machinery and Transport Equipment fell by US$20 million to US$831 million. Chemicals imports was valued at US$741 million, a decrease of US$80 million. Manufactured Goods fell by US$41 million or 7.1 percent to US$544 million. Spending on Food, however, rose by US$12 million to US$888 million as a result of the sharp rise in the price of basic commodities.
Traditional Exports | For the period of January to November 2013, the country earned US$724 million from traditional domestic exports which fell by 2.9 percent or US$22 million versus 2012 period largely due to the decline in Manufacturing exports. Non-traditional domestic exports fell by US$104 million or 13.9 percent to US$643 million compared with the first eleven months of 2012.
Trade with USA improves | The value of imports from the United States of America, a major trading partner, fell by US$145 million or 7 percent to US$1,940 million to November 2013 compared to the similar period in 2012. Merchandise exports sold to the USA fell by US$19 million to US$711 million resulting in the trade deficit of US$1,229 million, down from US$1,355 million for the similar 2012 period, a decline of US$126.5 million.
Trade with CARICOM worsens | Goods imported by Jamaica from the CARICOM region from January to November 2013 grew by US$4.5 million to US$822 million, due largely to increased expenditure on “Food” which increased by US$13 million to US$151 million. Total exports fell by 20 percent or US$15 million to US$63 million.
Related posts | USA trade deficit worsens, Caricom improves | Big drop in trade deficit
GOJ deficit up in January
Government spent more in January than originally budgeted and collected less than projected to wipe out the projected $761 surplus originally budgeted, ending up with a deficit for the month of $3.274 billion. At the end of January, the year-to-date deficit is at $22.9 billion, just $2.65 billion less than the amount budgeted.
The revenue for the month was short of the $31.37 billion budgeted by $820 million. Capital expenditure exceeds the budget of $3.53 billion in the month by $1.45 billion coming in at $4.98 billion. However, capital expenditure is still running $7.6 billion below budget for the year to January.
The budget projected a shortfall of $2 billion in February and $19.5 billion surplus in March. The latter is in keeping with historical pattern with the last month of the fiscal years realizing a surpluses. If the budget is achieved for the remaining two months of the fiscal year, the fiscal deficit will come close to being wiped out and would have been reduced from $54.6 billion.
For the 10 months to January, tax revenues fell short by $13.2 billion and non-tax was below budget by $3.6 billion and recurrent expenditure was down $14.4 billion from budget. Interest cost was lower by $3.9 billion and other recurrence expenditure by $6.8 billion.
USA trade deficit worsens, Caricom improves
Trade deficit deteriorates with USA | Jamaica’s trade deficit with the United States of America (USA) to October last year resulted in savings of US$136 million, which flowed from a rise in exports and a reduction in imports. This is a decline from the position in August when there was a $212 million improvement.
At the end of the 2013 period, the trade deficit with the USA stood at US$1.1 billion, down from US$1.24 billion in the comparable 2012 period. The value of imports the during the January to October 2013 fell by US$103 million or 5.6 percent to US$1.753 billion compared to the same period in 2012 and exports rose by US$32 million or 5.2 percent to US$651 million, representing 49.6 percent of total earnings from exports.
Expenditure on goods imported from the USA accounted for approximately 34.0 percent of Jamaica’s total expenditure on imports.
Image courtesy of Sommai/FreeDigitalPhotos.net
Caricom trade improves | The trade deficit with the Caricom region for the year to October 2013 showed a US$65 million or 9 percent improvement over the similar period in 2012 with the deficit amounting to US$654 million, down from US$719 million in the comparable period of 2012.
Imports from CARICOM during January to October 2013, fell by 10.2 percent or US$80.3 million to US$709.6 million as a result of a decrease in expenditure on “Mineral Fuels, etcetera”. Up to August, imports fell by US$80 million as well and the reduction seems to have stabilised at a lower level than before. Expenditure on this commodity group accounted for 66.6 percent of goods imported from CARICOM during the 2013 period and imports fell by US$87 million or 15.6 percent to US$472 million in the current period. By comparison, in the January to October 2012 period, imports of “Mineral Fuels, etcetera” represented 70.8 percent of Jamaica’s total import bill with CARICOM.
Importation of “Food” rose by 9.3 percent or US$11.9 million to US$140.2 million. Spending on “Beverages & Tobacco” also rose marginally to US$33.4 million.
Total exports declined by 21.2 per cent or US$15.0 million to US$55.8 million during the January to October 2013 period. Domestic exports moved down from US$62 million to US$48 million because of decreases in “Chemicals”, “Misc. Manufactured Articles” and “Mineral Fuels, etcetera”. Earnings from these three commodity groups fell in the 2013 review period to US$5.1 million, US$3.4 million, and US$0.4 million respectively.
Related posts | Non-Traditional exports up | Caricom imports drop
Image courtesy of StuartMiles/FreeDigitalPhotos.net
Employed up, so too unemployed
The unemployment rate for September 2013 was 14.9 percent compared to 14.0 percent in September 2012 but males unemployment rate was well below the national average at 10.6 percent but that for females at 20 percent was way over the average.
Employed up | The Employed Labour Force for September 2013 was 1,110,700 or 6,700 more than the 1,104,000 recorded in September 2012. For males, it increased by 6,400 (1.0 percent) to 637,800 and for females there was no noticeable movement.
The Unemployment rates among youths aged 14-24 years was 37.7 percent in 2013, an increase of 3 percentage points compared with 34.7 percent in September 2012. At the same time, male unemployment rate for youths was 31.4 percent compared to 46.2 percent for females.
The main findings of the 2013 Labour Force Survey, conducted by the Statistical Institute of Jamaica (STATIN) and covers the reference week of September 22-28.
Clerks got jobs | While the unemployment rate moved up in September, it was not all doom and gloom as the Occupation group ‘Clerks’ in the Employed Labour Force increased by 14.3 percent or 12,800 persons, from 89,400 in September 2012 to 102,200 in September 2013. The group ‘Service Workers and Shop and Market Sales Workers’ had the largest decline for the same period, moving from 225,900 to 215,300 in September2013 resulting in a decline of 10,600 (4.7 percent) persons.
In September 2013 the largest percentage increase in employment occurred in the industry group ‘Health & Social Work’ where the number of persons employed increased by 32.1 percent or 8,400 persons moving from 26,200 in September 2012 to 34,600. During the same period, the industry group ‘Other Community, Social and Personal Service Activities’ declined by 3,900 (6.1 percent).
Increased unemployed | The number of unemployed persons increased by 14,100 (7.8 percent) moving from 179,900 in September 2012 to 194,000 in September2013. Over the same period the number of unemployed males increased by 1,400 (1.9 percent) and the number of females by 12,700 (12.0 percent).
The number of persons in the Labour Force was 1,304,800, which was 20,900 (1.6 percent) higher than the 1,283,900 recorded in September 2012. The male labour force increased by 7,900 (1.1 percent) from 705,700 in September 2012 to 713,600 in September 2013, and the female labour force increased by 13,000 (2.2 percent) moving from 578,200 to 591,200 during the same period.
Outside labour force | Persons classified as Outside the Labour Force in September 2013 was 774,300. This represents a decrease of 15,200 (1.9 percent) when compared to 789,500 in September 2012. Over the same period, the number of males Outside the Labour Force declined by 5,100 (1.6 percent) moving from 311,700 to 306,600 and females by 10,100 (2.1 percent) moving from 477,800 to 467,700.
Grants prop up GOJ revenues
The Government of Jamaica’s revenues for December 2013 came up well short of budget. It would have been worse but for an unscheduled intake of grants amounting to $4.1 billion, which helped to prop up the revenues that fell short of budget by $7 billion. Overall, the fiscal operations ended up with a surplus of $5.32 billion in December compared to $5.25 billion originally projected.
For the nine months to December, the government is running $11 billion short on revenues and paid $16 billion less on housekeeping expenses and interest, excluding loan repayments, for an overall deficit of $19.6 billion that is $4.2 billion less than the amount budgeted for of $24.78 billion.
The revenue shortfall is across all major categories with international trade being one of the worse areas, down by $5.7 billion or 6 percent, Income taxes $5.2 billion or 7 percent followed by production taxes off by $1.5 billion or 2 percent. Amount spent on interest is down by $5 billion and capital expenditure by $9 billion.
The government is expected to announce in Parliament that they will close out the 2013/14 fiscal year with a virtual wipeout of the budgeted deficit by the end of March.
Related posts | Ministry confirms deficit wipe out | Fiscal deficit improvement continues | Imports fall and deficit narrows
Image courtesy of StuartMiles/FreeDigitalPhotos.net
Interest rate rise & fall
Interest rates on the latest issues of treasury bills by the Government of Jamaica on the 15th and 24th of January 2014 to provide funding for $1.2 billion showed mixed results.
Three offerings were available of $400 million each for duration of 28 days, 91 and 182 days. The rate on the 91 day instrument resulted in an average rate of 7.4292 percent a slight decline compared with the last issue of same duration, the rate for the 182 day instrument came out at 8.71734 percent reflecting a rise over the 8.25335 percent that obtained at the December 2013 auction, the 91 day issue resulted in an average rate of 7.5338 percent.
Investors received rates as high as 7.77998 percent for the 30 day T-Bill and as high as 10 percent for the longer dated instrument. Just over 11 percent of investors’ funds benefited from the higher yield for the 90 day paper buy. It was as high as 6.969 percent for the short term T Bills.
On January 15, an issue of a 28 day Treasury bill resulted in an average rate of 6.12 percent similar to the issue in December 2013 with a 6.12 percent average rate for the 28 day offer maturing in January and continues to compare favourably with the 6.2522 percent that obtained at the offer in November.
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