Jamaican economy recovers, but unemployment remains high: IMF

Jamaica's economy is recovering gradually, with inflation remaining low and international reserves continuing to increase, but its unemployment rate remains high, an International Monetary Fund (IMF) mission said in a statement Friday.

The mission has concluded a 10-day review of Jamaica's economic performance under the four-year Extended Fund Facility (EFF) endorsed by the IMF, to inspect whether the Caribbean island has met all quantitative targets and structural benchmarks under the program.

The EFF has been established to help countries which are experiencing serious payment imbalances because of structural impediments or are characterized by slow growth and an inherently weak balance of payments, according to its official website.

"Program implementation under the EFF remains strong -- all quantitative performance targets through end-June were met, with tax revenues exceeding expectations, and structural reforms are well in train," the statement said.

The IMF team noted that Jamaica's economic growth has been revised up to 1 percent in the 2015-2016 fiscal year and is expected to reach 1.7 percent in the 2016-2017 fiscal year, as ongoing investments, including in tourism, mature and agriculture continues to recover.

"Inflation remains low, and gross international reserves continue to increase, reaching almost 3 billion U.S. dollars at end-July," the statement added.

However, the mission found that unemployment remains high at 13.7 percent in the country, which is partly due to an expansion in the labor force.

Continued strong implementation of the government's growth strategy is crucial to support the creation of jobs and alleviate poverty, said the statement.

It indicated that strengthening the social safety net in Jamaica is essential to protect the poor and vulnerable from any adverse effects caused by the shift from direct to indirect taxation.

Meanwhile, the mission stressed the importance of ongoing reforms in the public sector to achieve efficiency gains and the necessity of developing a comprehensive strategy for liability management to further minimize concentration and refinancing risks.

Based on the preliminary findings of this mission, a report will be presented to the IMF's Executive Board for discussion and decision, which is scheduled next month, on the completion of Jamaica's thirteenth review under the EFF.

Upon approval, about 40 million U.S. dollars would be made available to Jamaica. The IMF-Jamaica EFF deal was set to approve a 952.3-million-dollar loan in total for the country. Endi