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Jamaica

Author(s):
International Monetary Fund
Published Date:
February 1999
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Jamaica: Basic Data
I. Social and Demographic Indicators
Area10,830 sq. km
Population (1997)2.6 million
Density (population per square kilometer)232.9
Population annual growth rate (percent)1.0 percent
Of which:
Urban2.3 percent
Life expectancy at birth (1995)74.2
Infant mortality (per thousand) (1995)12.6
Population per physician (1993)6419.7
Access to safe water70.0 percent
Urban92.0 percent
Rural48.0 percent
Gross enrollment ratios (percent of school age group)
Primary109.0 percent
Secondary66.0 percent
Unemployment rate (1997)16.5 percent
GDP at market prices (1997) 1/US$6.6 billion
GDP at market prices per capita 1/US$2,623.5
II. Economic Indicators, 1993–972/
Prel.
19931994199519961997
(In percent of GDP)
Origin of GDP (current prices) 3/
Agriculture8.09.09.18.38.0
Mining6.47.16.95.95.6
Manufacturing18.118.417.016.716.3
Construction12.411.812.511.611.3
Government services9.98.18.911.412.1
Other services45.245.646.046.146.8
(Annual changes in selected indicators)
Real GDP per capita0.4-0.1-1.2-2.9-3.4
Real GDP1.31.00.0-1.9-2.4
GDP at current prices35.631.926.216.27.9
GDP deflator33.831.926.319.610.6
Consumer prices (period average)24.332.022.821.59.1
Consumer prices (end of period)37.121.230.89.58.8
Central government revenue 4/42.734.429.77.74.7
Central government expenditure47.234.240.637.812.0
Money and quasi-money32.539.320.627.85.3
Net domestic assets of the banking system 5/27.811.99.419.69.6
Credit to public sector-8.3-10.38.1-0.720.4
Credit to private sector36.122.21.320.3-10.8
Merchandise exports (f.o.b.) in U.S. dollars)4.916.212.3-4.82.1
Merchandise imports (c.i.f.) in U.S. dollars)21.84.325.70.55.5
Terms of trade (- deterioration)-1.73.41.0-12.4
Nominal effective exchange rate (- depreciation) 6/-21.51.8-15.916.5-1.2
Real effective exchange rate (- depreciation) 6/-10.011.97.925.49.3
(In millions of Jamaica dollars)
Central government finances
Total receipts33,61444,59658,52363,08566,080
Total expenditure 7/29,99739,80254,71778,05287,516
Total financing-3,617-4,794-3,80614,96721,436
External financing (net)799-2,083-3,640-4,8342,933
Domestic financing (net)-4,416-2,711-16619,80118,504
Of which:
Divestment proceeds0-995-45200
(In millions of U.S. dollars)
Balance of payments
Merchandise exports (f.o.b.)1,1021,2801,4381,3691,398
Merchandise imports (c.i.f.)2,2312,3272,9262,9423,104
Interest payments (net)241229220217229
Current account-5618-215-166-361
Public sector capital (net)-53-108-12839135
Private capital including errors and omissions (net)245484390279173
Overall balance (deficit -)13739447152-53
Change in reserve assets (increase -)-137-394-47-15253
International reserve position 6/
Central bank (gross)429783732818730
In weeks of nonbauxite imports1017131412

Calculated at J$36.5 per U.S. dollar.

For fiscal years which begin April 1.

Calendar year data.

Includes grants but excludes privatization receipts

Annual change as a percent of liabilities to the private sector at the beginning of the period.

End of period.

Including unallocated expenditure but excluding capital support to the financial sector.

Calculated at J$36.5 per U.S. dollar.

For fiscal years which begin April 1.

Calendar year data.

Includes grants but excludes privatization receipts

Annual change as a percent of liabilities to the private sector at the beginning of the period.

End of period.

Including unallocated expenditure but excluding capital support to the financial sector.

I. Financial System Developments

A. Background

1. Since the establishment of the first bank in 1836 by English merchants, Jamaica’s financial system developed continuously and by the mid-1990s consisted of private and public financial institutions ranging from traditional commercial banks to merchant banks, building societies, credit unions, insurance and trust companies, finance houses, investment banks, and specialized institutions such as the Agricultural Development Bank, the National Development Bank, and the Jamaica Mortgage Bank.

2. The financial system experienced substantial growth over the period 1989–95 as a result of the liberalization of financial markets and the reduction in government involvement in the industry through the privatization of banks.1 Although a stock exchange was introduced in 1969, until recently, most of the allocation of savings continued to take place through traditional institutions of financial intermediation rather than capital markets. Only some 20 companies are regularly traded on the Jamaica Stock Exchange and total market capitalization amounted only to J$66.1 billion or about 30 percent of GDP in 1996. Most of the listed and traded instruments on the stock exchange are ordinary/common stocks; corporate bonds are practically nonexistent.2 Government bonds are not traded on the stock exchange but rather by the Bank of Jamaica (BOJ) in an over-the-counter market. However, an unregulated commercial paper market has been growing over the last couple of years through which enterprises access, with and without commercial bank guarantees, credit from private sources. There are no registration or regulatory requirements affecting transactions in this market. Private informal estimates place the size of this market at between J$20–40 billion (8–16 percent of GDP).

3. A few private companies have accessed international capital markets in amounts estimated at about US$200 million, and in 1997 the government for the first time placed a US$200 million Eurobond followed by an additional Eurobond issue of US$250 million in 1998. Prior to the most recent Eurobond issue, Jamaica received its first bond rating from Moody’s which rated Jamaica’s sovereign debt as a Ba3.

4. Since mid-1995, Jamaica’s domestic financial system has been in distress facing both liquidity and solvency problems which prompted the government to intervene on a large scale leading to a partial nationalization of the domestically owned financial sector at a gross cost of over 30 percent of GDP. The following sections describe some of the developments that contributed to the financial system collapse, the government’s response, and lays out the challenges that remain to be addressed.

B. Financial Crisis Developments

Privatization and liberalization of financial markets

5. In line with the government’s overall strategy in the mid-1980s to reduce the size of the public sector, banks that had been acquired by the government in the 1970s were sold back to the private sector. The ownership of the largest domestic bank, National Commercial Bank (NCB) was transferred in several stages to the private sector starting in 1986 when more than 40 percent of the shares were sold.3 Another formerly publicly owned bank (Workers Savings and Loan Bank) was privatized in 1991. The sale of banks was largely limited to domestic investors.

6. In addition to privatizing, the Jamaican Government liberalized both the foreign exchange and financial markets. In case of the latter, previously regulated interested rates were freed, credit controls were removed, and the BOJ switched to market-based instruments of liquidity management.4 While these measures were intended to contribute to a more efficient allocation of savings and hence to higher economic growth, the liberalization of financial markets took place without developing an adequate regulatory system and prudential requirements. As a result, supervision remained weak and some institutions, such as insurance companies unit trusts, and building societies remained de facto unregulated. The increased competition, in turn, encouraged institutions to search for ways to avoid costly regulatory requirements (such as high legal reserve requirements) and supervision, and to engage in deposit-taking activities that would give them access to cheaper funds. For example, when reserve requirements were lower for merchant banks than for commercial banks, the number of merchant banks increased from 6 in 1981 to 21 in 1990. Once reserve requirements were raised on merchant banks, building societies—which were not subject to reserve requirements—experienced substantial growth leading to an increase in the number of institutions from 6 in 1990 to 15 in 1995. Overall, the number of banking institutions increased substantially between 1980 and early 1990, especially in the latter part of the decade (Table 1). Since the Jamaican legal framework did not prohibit the creation of universal bank holding companies, the new institutions became part either of holding companies or larger financial conglomerates which often comprised a commercial bank, a merchant bank, a building society, an investment bank, and an insurance company, and the fact that different types of financial institutions were subject to different legal reserve requirements encouraged the growth of these conglomerates.

Table 1.Jamaica: Financial Sector Developments(In millions of Jamaica dollars; unless otherwise indicated)
196119711981199019951996
Commercial banks
Number of banks66810119
Number of branches69131179170205188
Assets/liabilities2062,63517,328121,325135,986
Deposits4062,10312,09889,13594,103
Loans3301,4958,99745,86454,721
Merchant banks
Number of institutions36212523
Assets/liabilities12934,52717,33423,262
Deposits2352,8436,8686,706
Loans10382,8636,0247,349
Trust companies 1/
Number of institutions261031
Assets/liabilities2416310921
Deposits1412686
Loans1410475
Building societies
Number of institutions716761513
Assets/liabilities17573883,05828,73932,962
Savings funds14533672,66724,31526,003
Loans14462711,5969,18614,529
Credit unions
Number of institutions11012796808277
Savings2101856843,1064,681
Loans191846432,6923,652
Finance houses
Number of institutions10544
Assets/liabilities59266639566
Savings funds47157209236
Loans33168206185
Life insurance companies
Number of institutions162013101212
Assets611294032,072
Source: Bank of Jamaica.

1993 data instead of 1995.

Source: Bank of Jamaica.

1993 data instead of 1995.

7. The dramatic increase in the number of building societies is illustrative of developments in the first half of the 1990s. While prior to liberalization most building societies were established as mutual societies owned by their respective savers, financial liberalization encouraged the creation of such institutions by larger conglomerates. Among the many privileges that these building societies enjoyed was the fact that neither the statutory cash reserve nor any liquid asset or loan loss reserve requirement applied to them. In addition to these implicit “tax breaks,” building societies enjoyed direct tax advantages since the corporate tax for building societies was 3½ percentage points lower than for banks and, unlike the case of commercial banks, interest earned by depositors on share savings were not subject to a withholding tax. Furthermore, the supervision of these institutions was not performed by an independent agency but rather by the sector’s own umbrella organization, the Jamaica Building Societies Association. In addition to the looser regulatory requirements, building societies benefitted from weaker prudential standards. For example, prior to March 1996 the initial amount of capital required to set up a building society amounted to J$10,000 (about US$250). While the banking sector witnessed a tightening of its legislation with respect to limits on investments in commercial companies and lending to single customers in 1992, building societies were not subjected to these limitations until 1994.

8. In effect, the larger conglomerates used the specialized banks as a means of increasing their deposit base and the distinction between deposit-taking banks and other institutions, such as insurance companies, became increasingly blurred as the latter created deposit-like instruments. Relatively shorter-term deposits captured by insurance companies and other financial institutions were then used to finance longer-term investment projects, especially in real estate and tourism development. The assessment of risk was also eroded as connected parties increasingly became the beneficiaries of additional lending by official institutions, in the face of weak supervision. The weakness of the financial system became apparent to the general public when the minister of finance and planning intervened in the Blaise Group in 1994 and subsequently established the Financial Institutions Services Company (FIS) to liquidate the group (Box 1).

Box 1.Financial Institutions Services

The Financial Institutions Services (FIS) was established in October 1995 as an off-budget, wholly government-owned limited liability company, in the aftermath of the bankruptcy of the Blaise Financial Groups.1 FIS was initially charged with the implementation of a “scheme of arrangement” for the Blaise group, drafted in July 1996. FIS was later entrusted with the implementation of a similar scheme for the failed Century Financial Entities (comprising Century National Bank, Century National Building Society, and Century National Merchant Bank). FIS is responsible for paying creditors of the two institutions and for selling the assets acquired from Blaise and Century. FIS is empowered to issue debt in its own name to finance the payout of the depositors. In the case of Century, depositors are entitled to open accounts with National Commercial Bank (NCB), which, in turn, receives FIS notes as corresponding assets. As of April 30, 1998, FIS had issued debt amounting to J$9.3 billion (3.6 percent of GDP); an additional J$2.5 billion (1 percent of GDP) is scheduled to be issued in June 1998. The instruments are issued both in domestic and foreign currency with coupon rates ranging from zero to market-determined rates linked to treasury bill rates. Some FIS instruments include a provision that allows for the capitalization of interest. FIS is also empowered to pursue civil litigation against shareholders and directors of the Century group that contributed to the failure of the institutions and to assist the judicial system in its effort to investigate fraudulent behavior on the part of former managers and owners. If a judgement against the former owners and managers is issued, FIS would assist in identifying and obtaining the control of assets of the respective individuals. FIS is supervised by a board of seven directors.

1These comprised Blaise Trust & Merchant Bank, Blaise Building Society, and Consolidated Holdings Limited.

Monetary policy and financial sector developments

9. Confronted with a weak banking system but also with a renewed acceleration of inflation rates that had reached 30 percent at the end of 1995 and the increased pace of devaluation of the currency, the government decided to target inflation as the primary objective of its economic program. Implementation of a tight monetary policy reduced the growth of money from over 45 percent in mid-1995 to less then 15 percent within the next 12 months (Figure 1). The sharp reduction in the growth of money balances, led to a contraction of real money balances, and real interest rates shifted from negative to positive 30 percent. Although economic activity was sluggish even in previous years—averaging about 1 percent per year between 1990 and 1995—aggregate demand contracted further leading to a decline in output of almost 2 percent in FY 1996.

Figure 1.Jamaica: Interest Rates and Financial Sector Crisis, 1995–98

Sources: Bank of Jamaica; and International Financial Statistics.

1/ Six-months T-bill rate.

2/ Deflated by the observed six-months ahead inflation rate.

10. High real interest rates and the related recession affected the financial sector in several ways. While insurance companies had initially raised short-term financing to invest in long-term assets such as real estate, rising interest rates brought the maturity mismatch of assets and liabilities into the open, as insurance companies borrowed from banks (especially connected banks) to finance interest payments on short-term deposits. At the same time, the high real interest rates reduced the relative return on investments in fixed assets, thereby reducing their market price. Furthermore, as investors withdrew their funds, as the perceived risk of deposits increased, insurance companies became a major drain on the liquidity of the banking system as they resorted further to credit from institutions (especially banks) within the conglomerate for support. In addition to the adverse impact of insurance companies on banks, the loan portfolio of the banking system deteriorated as the return on the related projects declined. Furthermore, the recession and the resulting drop in sales reduced the ability of debtors to service the increasingly costlier debt service obligations contributing to the liquidity problems of banks.

11. The first commercial bank to run into substantial liquidity problems was Century National Bank in 1995 (Table 2), and an on-site inspection by BOJ revealed a shortfall in assets of over J$l billion. By mid-1996 Century had accessed overdrafts in an amount of J$4.3 billion (almost 2 percent of GDP).5 With real interest rates rising rapidly and after lengthy negotiations, the government finally intervened and assumed temporary management in July 1996. Although the earlier liquidation of Blaise did not undermine the general confidence of the public in the viability of the financial system, the assumption of temporary management in Century and the initial announcement by the government to limit payouts to depositors to 90 percent of deposits with a ceiling of J$100,000 (about US$2,500) contributed to a loss in confidence that was followed by runs on Citizens Bank in December 1996 and Eagle Bank in January 1997. In both cases, the BOJ provided substantial liquidity support, which in the case of Eagle amounted to some 6 percent of GDP.

Table 2.Jamaica: Chronology of Financial Crisis and Government Response
DateInstitution/ActGovernment Action
December 1994Blaise Financial Entities (Blaise Trust and Merchant Bank,

Blaise Building Society, and Consolidated Holdings

Limited)
Intervention and temporary management.
October 1995Financial Insitution Services (FIS)Incorporation of Financial Information Services (FIS) with the initial

mandate to liquidate Blaise.
February 1996Universal Investment BankLiquidation.
July 1996Century Financial Entities, Century

National Bank, Century National Merchant Bank and Trust Company, Century

National Building Society)
Century National Bank takes advantage of automatic overdraft facility with

the Bank of Jamaica which reached J$4.3 billion (about 2 percent of GDP)

by July 1996. Intervention and temporary management by government.
December 1996Citizens BankBank run because of rumors of insolvency. The BOJ provides liquidity

support.
January 1997Financial Sector Adjustment Company (FINSAC)Establishment of Financial Sector Restructuring Company (FINSAC) with

the mandate to restructure, merge, and capitalize financial institutions.
February 1997Eagle BankBank run. BOJ provides liquidity support of about 6 percent of GDP.
March 1997Eagle Financial Network (comprising a

commercial bank, a merchant bank, an insurance company, and two hotels)
Purchase of the group by FINSAC for J$1.
May 1997Canadian Imperial Bank of Jamaica (CIBJ)Acquisition of 20 percent of ownership by FINSAC from Life of Jamaica.
May 1997Island Life Merchant BankAcquisition from of 26.5 percent by FINSAC.
May 1997Citizens BankAcquisition by FINSAC of 60 percent of ownership from Life of Jamaica.
May/June 1997Life of Jamaica Insurance CompanyLiquidity support and acquisition of 26.5 percent of ownership by FINSAC.
June 1997Dyoll Merchant BankAcquisition of 26.5 percent of ownership by FINSAC.
October 1997Financial Institutions ActPassage by Parliament of the Amendment to the Financial Institutions Act.
October 1997Banking ActPassage by Parliament of the Amendment to the Banking Act.
December 1997Building Societies ActPassage by Parliament of the Amendment to the Building Societies Act.
December 1997Industrial and Provident Societies ActPassage by Parliament of the Amendment to the Industrial and Provident

Societies Act.
January 1998Billy Craig Finance and Merchant BankAcquisition of 49 percent of shares from stock holders by FINSAC.
February 1998National Commercial Bank (NCB)Acquisition of 40 percent of shares in NCB and 44 percent in the NCB group

by FINSAC from Mutual Life.
February 1998Workers Financial Entities (comprising Workers Savings

and Loan Bank, Corporate Merchant Bank, and Capital

Insurance Building Society)
Intervention by the government and assumption of temporary management.

At the time of the intervention, the outstanding overdraft with the BOJ

amounted to J$4.6 billion.
March 1998Jamaica Deposit Insurance Corporation ActPassage of deposit insurance scheme by Parliament which insures deposits of

up to J$200,000 currently covering about 98 percent of all deposit accounts

(not yet in effect).
March 1998Horizon Merchant BankIntervention by the government.
May 1998Mutual LifeAcquisition of 49 of ownership by FINSAC.
June 1998Fidelity Merchant BankIntervention by the government (promissory notes will be dated January

1998).

C. Government’s Response to the Financial Sector Crisis

12. The government’s response to the crisis has been to announce publicly that all depositors, life insurance policyholders, and pensioners are insured for their total exposure. Furthermore, it entrusted a newly established institution (the Financial Sector Adjustment Company, FINSAC)6 with the resolution of the problems in the financial sector, and pushed more forcefully for the passage of a number of amendments to strengthen the powers of supervision over the financial system. Through FINSAC the government has pursued a three-pronged approach to addressing the problems of the financial system:

13. First, it has provided financial institutions with liquidity support and capital injection in exchange for ordinary and preference shares. As of April 30, 1998, FINSAC’s overall support to the financial system amounted to some J$64.2 billion (24.9 percent of GDP). The largest amount of support, some J$40.3 billion (15.6 percent of GDP) was provided directly in form of FINSAC notes most of which carry an interest rate that is linked to treasury bill rates; some J$21.7 billion (8.4 percent of GDP) reflect FINSAC’s assumption of BOJ’s overdrafts extension to a number of financially weak institutions which took place in form of a paper transaction compensating the BOJ for its initial liquidity support, and J$2.2 billion (0.9 percent of GDP) in form of an actual cash injection. In the process of providing capital support, the government through FINSAC has gained ownership stakes in five commercial banks, seven insurance companies, three building societies, and three merchant banks (Table 3). In all cases, FINSAC negotiated the purchase of ownership stakes of at least 25 percent to obtain veto power over management decisions as in some cases the management of the institutions was retained. In the process of providing support, FINSAC severed the financial ties that existed between insurance companies and banks. The second part of the strategy has been to begin to restructure and rationalize the domestic financial institutions. Besides fostering the merger of institutions to create fewer but viable ones, FINSAC has started to purchase nonperforming loans from banks to create “good banks” and allowing managers to be evaluated the profitability of the bank. As part of the rationalization phase, FINSAC is requiring entities under its control to improve their internal accounting, credit evaluation, and loan portfolio management. Third, FINSAC is entrusted with the return of assets to the private sector which include, in addition to shares in banks and insurance companies, numerous collateral assets such as hotels and agricultural lands. Although FINSAC can initiate the privatization process, sales have to be approved by the minister of finance or the full cabinet depending on the price of the assets.

Table 3.Jamaica: Acquired Ownership in the Financial Sector by FINSAC 1/2/
Ordinary shares
I. Banks
Billy Craig Finance and Merchant Bank49.0
Canadian Imperial Bank of Commerce (C.I.B.C.)25.0
Citizens Bank85.0
Eagle Commercial Bank100.0
Eagle Merchant Bank100.0
Horizon Merchant Bank100.0
National Commercial Bank40.0
National Commercial Bank Group44.0
Workers Bank 3/
II. Building Societies
Citizens Building Society85.0
Eagle Permanent Building Society100.0
Horizon Building Society100.0
III. Insurance companies
Crown Eagle Life100.0
Dyoll Life26.5
Horizon Securities100.0
Horizon Life100.0
Island Life26.5
Jamaica Mutual Life Assurance Society 4/49.0
Life of Jamaica26.5
Source: FINSAC.

FINSAC is a government-owned limited liability company. Holdings as of May 15, 1998.

As a result of the purchase of financial institutions, FINSAC has indirectly acquired 10 hotels and other real estate.

The Minister of Finance intervened and appointed a Temporary Manager.

Government ownership once the company has been demutualized.

Source: FINSAC.

FINSAC is a government-owned limited liability company. Holdings as of May 15, 1998.

As a result of the purchase of financial institutions, FINSAC has indirectly acquired 10 hotels and other real estate.

The Minister of Finance intervened and appointed a Temporary Manager.

Government ownership once the company has been demutualized.

14. In addition, the government has undertaking a number of changes to the legal framework aimed at improving supervision and prudential requirements encompassing among others the following:

a. provisions to make bank licensing procedures stricter,

b. a tightening of prudential limits on connected lending,

c. the introduction of Basle capital requirements—to be set at 10 percent of risk-based assets and to be implemented by end-1999,

d. restricting the ability of banks to use special debentures in meeting capital requirements,

e. allow for vesting of voting rights of intervened institutions with the minister of finance or legally provide for possible restructuring or mergers,

f. placement of external auditors under a positive obligation to report to BOJ any factor that materially affect financial viability,

g. the application of financial and criminal penalties on institutions and on relevant senior staff for failure to comply with regulatory requirements, and

h. changes in provident fund legislation to restrict their ability to act as deposit taking institutions.

15. Furthermore, in the first quarter of 1998, Parliament approved the Deposit Insurance Act aimed at protecting deposits of up to J$200,000 (about US$5,500). Although the legal framework has been created, the Deposit Insurance Scheme has not been set up yet.

16. The government’s decision to rescue the entire financial system by keeping all institutions open and insuring all depositors, life insurance policyholders, and pensioners has averted a widespread loss in confidence and prevented a major outflow of capital. At the same time, the financial system experienced a flight to quality resulting in a shift of deposits from domestic to foreign institutions. However, the government’s strategy has come at a high fiscal cost and a number of challenges still need to be addressed.

D. Future Challenges

17. In general, the operating environment for financial institutions continues to be poor and is not likely to improve in the coming months notwithstanding the intervention of financial institutions through FINSAC. A return to a more stable financial system is hampered by very high real interest rates and weak prospects for economic growth. In addition to these macroeconomic factors, the high interest rates reflect the inordinately high unremunerated cash reserve requirements currently in place.

18. High unremunerated cash reserve requirements and the fact that different types of financial institutions that are engaged in almost identical activities are still faced with differential cash reserve and capital requirements as well as different tax rates will continue to encourage market participants to engage in institutional arbitrage. Without a reduction in the cash reserve requirement to levels that are warranted for prudential reasons and the creation of a level playing field for institutions and markets that offer similar financial products, Jamaica will continue to be faced with the very conditions that contributed to the current financial sector crisis.

19. With respect to the legal framework and the implementation of new requirements, substantial progress has been made in tightening the supervision and prudential regulation of the banking system. However, other parts of the financial system remain virtually unregulated. The growing commercial paper market in particular poses substantial risk, and a default by a major lender could extend the crisis to the commercial paper market and even prompt the government to provide additional bailouts. Furthermore, while the capital adequacy ratio for deposit-taking institutions that is currently being considered would exceed Basle standards, the same would not apply to affiliated institutions at the consolidated level. Over-leveraged affiliates and an inadequate level of capital at the group level could continue to overburden banks even when they come into compliance with the new capital adequacy requirements. The same risk applies to the coverage of the new standards of “fit and proper” for owners, managers, and large creditors. Since many institutions are not covered by these requirements, decision-making processes could be shifted to individuals in unregulated institutions that belong to the same group making the tightening of the requirements ineffective. Furthermore, improvements in supervision in the insurance sector has been slow despite the fact that many institutions remain insolvent and the insurance sector continues to offer deposit-like instruments.

20. Concerning FINSAC, in the process of bailing out the financial system, the government has gained control over a large part of the domestic financial system. Since many of the institutions had investments in real estate, the government has also become the owner of numerous real assets such as hotels. Despite the initial announcement that FINSAC would cease to exist after seven years, a clear exit strategy has not been developed and the government has already announced that it would not engage in “fire” sales. Furthermore, FINSAC is pursuing multiple and potentially conflicting objectives. On the one hand, FINSAC provides financial support, assumes ownership, and purchases nonperforming loans. On the other hand, it is mandated to sell the acquired assets hence limiting the losses to the government. However, without a clear separation of the functions and clear mandates for the respective parts of FINSAC, it will be difficult to monitor the performance of FINSAC and hold directors accountable. In addition, while FINSAC acquired ownership stakes in financial institutions, it has replaced only a few senior managers. Without the replacement of managers that contributed to the failure of many institutions, it will be difficult to improve corporate governance and limit the cost to the government.

II. Recent Developments in Monetary Policy in Jamaica

A. Background

Institutional developments

21. Before 1960 the only laws affecting banking business in Jamaica were the Stamp Duty Law of 1937, the Currency Notes Law of 1939, and the Bank Notes Law of 1942. The Stamp Duty Law prohibited banks from issuing any unstamped promissory notes for money, without an annual licence granted by the Stamp Commissioner. The Currency Notes Law provided for the issue of currency notes and coins of the Government of Jamaica, which was carried out by the Board of Commissioners of Currency. The Bank Notes Law made it unlawful for any person, except a banker, to issue bank notes. The volume of legal tender bank notes in circulation was restricted to a maximum prescribed by the Governor in Council, and banks were required to maintain deposits in legal tender coins and approved securities equivalent to the value of their notes in circulation. In 1954 the issuing of notes by all banks, except Barclays Bank, was prohibited.

22. Since 1960 monetary policy in Jamaica has been conducted by the central bank, the Bank of Jamaica (BOJ). According to the Bank of Jamaica Act (1960), the central bank’s objectives are to issue and redeem notes and coins; keep and administer the country’s external reserves; influence credit conditions in order to promote production, trade, and employment consistent with maintenance of domestic monetary stability and the external value of the currency; foster the development of domestic money and capital markets; act as banker to the government and the banks; and supervise the financial sector.7

23. In 1992 the BOJ was also allowed to act as banker to statutory bodies, local authorities, and certain government companies. The supervisory span of the central bank, initially confined to the commercial banks, was widened in 1973 to include near banks, such as trust companies, finance houses, and merchant banks, and in 1994 to include building societies. At the end of 1997 there were nine commercial banks, with assets totaling J$148 billion (US$4.1 billion), 26 near banks, with assets of J$18 billion (US$0.5 billion), and 11 building societies, with assets of J$38 billion (US$1 billion). Credit unions and insurance companies are supervised by the Registrar of Cooperatives and the Superintendent of Insurance, respectively.

Changing instruments of monetary policy

24. The central bank has made extensive use of its monetary policy instruments in an economic environment marked, especially since 1973, by balance of payments problems and large exchange rate fluctuations. The changing backdrop also included the transition in 1991 from a fixed exchange rate with trade and capital controls, to a flexible regime with full capital mobility and more liberalized trade. In this setting, initial reliance almost exclusively on nonmarket-based instruments of monetary control eventually gave way to more extensive use of market-based policy instruments (Box 2).

25. The central bank initiated a program to move to market-based instruments in 1985, and by 1989, interest rate controls were removed, the liquid assets ratio was significantly reduced, a program to remunerate reserve requirements was introduced, and open market type operations replaced credit ceilings as the primary instrument of monetary control. However, in response to a surge in credit and exchange rate pressures, there was a major policy reversal between 1989 and 1991 when credit ceilings were reintroduced, the LAR was raised, and payment of interest on a proportion of the reserve requirement was discontinued.8 In 1990 the central bank deregulated interest rates and in 1991 credit controls were abandoned.9 Cash and liquid assets ratios continued to be applied, being extended to foreign currency deposits at the end of 1991. After experiencing severe inflation in the early 1990s, averaging almost 40 percent per year, the Jamaican authorities decided to focus economic policy sharply on curbing inflation. In this restrictive monetary policy stance, open market operations played a prominent role.

Box 2.Jamaica: Main Changes in Monetary Policy Instruments

PeriodNonmarket-Based InstrumentsMarket-Based Instruments
1962–79Minimum savings deposit rate of 3.5 percent increased to

6 percent
Liquid assets ratio (LAR) for banks of 15 percent

increased to 29.5 percent.
Voluntary liquidity support scheme introduced.
Selective credit controls introduced.
1980–84Savings deposit rate increased to 13 percent.
Cash reserve requirement (CRR) of 5 percent increased

to 14 percent.
Liquidity support scheme abolished.
LAR1/ for banks increased to 44 percent; introduced for

near banks2/ at 10 percent and increased to 15 percent.
Ceiling on growth of credit to private sector of

12 percent.
Installment credit guidelines introduced.
1985–89Savings deposit rate increased to 18 percent.Financial sector reform

program initiated in 1985,

designed to switch reliance

from direct to indirect

instruments.
CRR for banks increased to 19 percent; introduced for

near banks at 1 percent and increased to 4.5 percent.
LAR for banks reduced to 20 percent; reduced for near

banks to 4.5 percent.
Credit by banks and near banks frozen at end-1989 level.Introduction of auction for

certificates of deposit issued

by the Bank of Jamaica.
BOJ paid interest on a proportion of CRR.
1990–94Savings rate deregulated.Reversal of financial sector

reform

program (1989–91); reinitiated in late 1991.
CRR for banks increased to 25 percent; for near banks

increased to 17 percent.
Payment of interest on a proportion of CRR.Primary dealer system for

conduct of open market

operations introduced:

primary dealers to act as

intermediaries.
LAR for banks increased to 50 percent; for near banks to

17 percent.
Foreign currency CRR introduced for banks at

20 percent, increased to 22 percent; also foreign currency

LAR of 40 percent.
Credit ceilings removed.
Installment credit guidelines removed.
1995–98CRR and LAR for building societies introduced, varying

from 1 percent to 11 percent.
Interest-bearing special

deposits at the Bank of

Jamaica introduced to

supplement government

securities in open market

operations.
LAR for banks reduced to 47 percent, for near banks

increased to 35 percent.
Foreign currency CRR for banks reduced to 20 percent;

for near banks established at 17 percent together with a

foreign currency LAR of 35 percent.

The liquid assets ratios include the cash reserve requirements.

Refers to merchant banks, trust companies, and finance companies.

The liquid assets ratios include the cash reserve requirements.

Refers to merchant banks, trust companies, and finance companies.

26. In 1996 a liquidity crisis reflecting a generalized solvency problem in the financial system emerged. Although the crisis initially surfaced among insurance companies, it quickly spread to commercial banks, merchant banks, and building societies.10 In this climate, the BOJ provided liquidity support to several financial institutions in distress, and subsequently became involved in a major restructuring effort. The problems in the financial system also prompted a revision of legislation to strengthen the regulatory powers of the central bank.

B. Monetary and Credit Policy in FYs 1996 and 199711

Credit to public sector and to banks

27. Advances by the BOJ to the central government are constrained by legislation to a maximum of 30 percent of the government’s estimated revenue for that financial year, which must be repaid within three months after the financial year. There is also a limit to the acquisition by the BOJ of primary market securities issued or guaranteed by the government of 40 percent of the government’s estimated expenditure in the financial year of acquisition. However, there are no limits on the BOJ’s purchases of government securities in the secondary market, and on the drawdown of government deposits at the central bank.

28. In FY 1996 the BOJ increased its financing to the public sector by J$1.2 billion (0.5 percent of GDP) and by J$27.6 billion (11.5 percent of GDP) in FY 1997, including J$12 billion of the securities issued by a public sector agency, the Financial Sector Adjustment Company (FINSAC), set up to deal with restructuring of the financial sector.12 By March 1998 the BOJ held J$31 billion of government securities (equivalent to 36 percent of government expenditure in FY 1997) and a further J$13 billion in government-guaranteed securities.

29. As lender of last resort, the BOJ has provided liquidity support to financial institutions by discounting securities held by these institutions, usually for very short periods—overnight or a few days—or by providing outright loans.13 As major problems developed in the financial system in 1996, gross credit to the banks increased, reaching J$12 billion (5 percent of GDP) by March 1997. In the following month these loans were purchased by FINSAC, in exchange for its own interest-earning securities.14 Subsequently, the central bank provided additional support to banks, amounting to J$5 billion by March 1998.15

Cash reserve and liquidity requirements

30. Initially imposed solely for prudential purposes, cash reserve requirements (CRRs) have been changed quite frequently in Jamaica, but have been relatively stable since 1994 (see Box 3 for details).16 CRRs are a component of the liquid assets ratios (LAR)—the differential between the CRR and the LAR is the percentage that is required to be maintained in other eligible liquid assets, primarily government paper.17 This has made for a source of captive credit for the government. CRRs and liquid assets ratios on foreign currency deposits of commercial banks were introduced in 1991 and were extended to near banks in 1995. Building societies continue to be exempt from CRRs or LARs on foreign currency deposits.

31. Between FY 1996 and FY 1997, the major change in these requirements was the increase in the LAR of near banks from 30 to 35 percent on both domestic and foreign currency, with their domestic and foreign CRR unchanged at 17 percent. The CRR and the liquid assets ratio on building societies remained in the range of 1 to 11 percent, with differential ratios applicable depending on the structure of the societies’ portfolio.

Box 3.Jamaica: Reserve Requirements and Interest Spreads

Use of domestic cash reserve requirements has featured prominently in the conduct of monetary policy in Jamaica. In 1962 commercial banks were required to deposit a minimum of 5 percent of designated liabilities in cash at the Bank of Jamaica; this ratio was raised progressively, and at mid-1998 stood at 25 percent. Near banks (merchant banks, trust companies, and finance companies) and building societies also need to satisfy cash reserve requirements, 17 percent for the former and between 1 and 11 percent for the latter at mid-1998.

Reserve requirements for commercial banks and near banks are calculated on the basis of prescribed liabilities, which include deposits, borrowings, and interest accrued on these liabilities. For building societies the relevant liabilities are deposits and withdrawable shares.

Cash reserves are a component of the overall domestic liquid assets ratios. The differential between the cash reserve and the liquid assets ratio is the percentage that is required to be maintained in other eligible liquid assets, which include Jamaican government treasury bills, local registered stock with nine months and under to maturity and (from December 1996) reverse repurchase arrangements with the Bank of Jamaica. Since May 1998, FINSAC securities are accepted as liquid assets.

Foreign currency reserve requirements and liquid assets ratios were introduced in 1991. Eligible liquid assets include short-term securities issued by the United States, Canadian and United Kingdom governments, certain deposits with prime overseas financial institutions, and designated foreign-currency denominated bonds issued by the Government of Jamaica.

As of mid-1998 the penalty for deficiencies on the domestic liquidity requirement for banks and near banks is 69 percent per annum, and 1/6 of 1 percent per day for building societies. For deficiencies in the foreign currency liquidity requirements, the penalty is 20 percent per annum.

The high cash reserve requirements have contributed to the large spread between deposits and loan rates: about 2,000 basis points in mid-1998. Figure 1 shows the strong relationship between rising reserve requirements and wider interest spreads since 1980. High reserve requirements have also contributed to the growing use of alternative financing facilities to bank loans, such as commercial paper and installment credit. The spread also reflects the high level of nonperforming loans, estimated at 24 percent of comercial bank loans at the end of 1997.

Jamaica: Requirements as a Percentage of Prescribed Liabilities As of June 1998
Domestic

Currency
Foreign

Currency
Commercial banks
Cash reserves25 percent20 percent
Liquid assets47 percent40 percent
Near banks
Cash reserves17 percent17 percent
Liquid assets35 percent35 percent
Building societies
Cash reserves1/1 percent/11 percentn.a.
Liquid assets1/5 percent/11 percentn.a.

The ratio is differentially applied based on the institutions’ portfolios.

The ratio is differentially applied based on the institutions’ portfolios.

Jamaica: Commercial Banks

(In percent)

32. The high CRRs have constituted a tax on the banking system and thereby contributed to the large spread observed between commercial bank loan and deposit rates. By mid-1998 the spread was about 2,000 basis points, with the CRR at 25 percent, compared to an average spread of 520 basis points between 1980 and 1983 when the CRR was 5 percent.18 Attempts to evade the reserve requirement have led to a burgeoning of credit facilities outside of the traditional loans offered by commercial banks and near banks. This includes a growing and largely unregulated market in commercial paper, and use of installment credit facilities. Although activity in the commercial paper market is under the ambit of the Securities Commission, it is not currently regulated, and the BOJ has made proposals to introduce regulation in this area.

Open market operations

33. Open market operations are currently the main tool of monetary policy in Jamaica. Through the sale or purchase of government or central bank instruments, the BOJ influences the inflation rate principally through affecting the growth of the monetary base, the amount of liquidity in the financial system and interest rates (Box 4). In the late 1980s, the BOJ issued its own certificates of deposit for use in open market operations but, with mounting central bank losses due to the high interest cost, there was a program to phase out these certificates of deposits and since early 1995 no new ones have been issued. Open market operations currently rely primarily on use of the central bank’s holdings of central government treasury bills, and long-term securities (Local Registered Stock or LRS, and government investment debentures).19 The BOJ has also allowed banks to hold “special deposits” at the central bank at negotiated interest rates for short periods when its holdings of government securities were low.20

Box 4:Jamaica: The Relationship between Prices and the Monetary Aggregates in Jamaica

  • Money base targeting

    The Bank of Jamaica since 1995 has focussed on changes in the monetary base as the principal intermediate variable in inflation targeting. This has evolved with the growing reliance on open market operations since 1994, and the monetary base is considered the appropriate target that is amenable to control by the central bank.

    Assuming unchanged reserve requirements, the Bank of Jamaica targets the monetary base to grow at approximately the expected rate of growth of nominal income. The extent of open market operations is then gauged based on forecasts of other factors such as the desired change in official reserves, and net credit to the public sector and to financial institutions. The figure on inflation and money shows that there is a relationship between price changes, base money, and M3. Defining the appropriate monetary variable that is related to inflation has been complicated by issues of causality, measurement, disintermediation caused by high interest rates (use of commercial paper, instalment credit, etc.), portfolio shifts associated with the banking crisis, and currency substitution (see “Inflation and Monetary Growth in Jamaica” in the 1996 RED report on Jamaica; SM/96/180).

  • Currency substitution

    Countries with high inflation generally experience some currency substitution as foreign currency usurps the functions of the domestic currency, as store of value, unit of account, and as medium of exchange, in that order.1 Some currency substitution has occurred in Jamaica, although a complete measure of the phenomenon is limited by lack of data on foreign currency circulating in the economy and on deposits by residents abroad.

    Holding of foreign currency accounts by residents was liberalized in 1990. The figure on foreign deposits and the exchange rate shows the share of foreign currency deposits in M4 (liabilities to the private sector including foreign deposits), along with changes in the exchange rate. The date give some support to the hypothesis that currency depreciation (itself strongly related to inflation) was associated with substitution out of Jamaica dollars. Foreign currency deposits are concentrated in time and savings deposits, although comparatively high interest rates on domestic instruments have worked to restrain the use of foreign currency deposits as a store of value.

Jamaica: Inflation and Money

(Percentage change, quarter-to-quarter)

Jamaica: Foreign Deposits and Exchange Rate

1/ See for example: Calvo, G. and C. Vegh, 1992, “Currency Substitution in Developing Countries: An Introduction,” Revista de Anàlisis Económico, Vol. 7, pp. 3–8, and Savastano, Miguel, 1996, “Dollarization in Latin America: Recent Evidence and Policy Issues,” IMF Working Paper 96/4, (Washington: International Monetary Fund).

34. In addition to outright sales/purchase of government securities, the BOJ engages in two types of arrangements: repurchases (repos) and reverse repurchases (reverse repos). Repos are used to inject liquidity into the financial system and involve the sale of securities to the Bank of Jamaica, under a contract to repurchase them at a pre-determined price and on a specified date. Liquidity accommodation in the form of repurchases is provided almost exclusively to commercial banks. Reverse repos, on the other hand, are generally used to tighten liquidity and involve a contract to purchase securities (mainly issued by the central government) from the BOJ’s inventory and resell them to the BOJ on a specified date at a predetermined price. The maturities of reverse repos are generally 30-, 60-, 90-, and 180-days; 1-year reverse repos were introduced in May 1998.21 The principal counter parties for reverse repos are commercial banks and “primary dealers.”

35. To be eligible to become primary dealers, firms must be commercial banks, merchant banks, money market or stock market brokers, with a minimum capital base (initially set at J$10 million), and must be licensed by the Securities Commission to deal in securities. A list of the primary dealers at mid-1998 is provided in Appendix I. The specific role of the primary dealers is to provide underwriting support for all new issues of Government of Jamaica treasury bills and Local Registered Stock and for Bank of Jamaica reverse repos. The dealers are to provide secondary market liquidity for these securities by being prepared to make active two-way markets in them. The system of primary dealers was started in April 1994 with the appointment of seven dealers, and in mid-1998 the number stood at 13. Primary dealers are granted access to credit at the Bank of Jamaica on a lender of last resort basis up to certain limits through a special sale and repurchase facility, intended to facilitate their occasional cash needs related to their market-making functions.

36. Open market operations are conducted regularly, with transactions occurring on a daily basis for the most part. A flowchart of the process appears in Box 5. While the base money target guides open market operations, in practice the day-to-day dynamics are heavily influenced by conditions in the foreign exchange market. For FYs 1996 and 1997 the BOJ did not announce explicit exchange rate targets but nonetheless acted to minimize exchange rate fluctuations. There was also an announced objective for the level of its net international reserves—equivalent to between three and four months of imports. Given the country’s open capital account, the short-term monetary policy focus at times shifted to the level of interest rates to influence the direction of capital flows. In general, once determined, the base money target for the fiscal year is not altered, but the volume of open market operations is adapted to deal with unexpected deviations in the BOJ’s credit to the public sector or to banks and its net international reserves.

Box 5:Jamaica: Flowchart on the Conduct of Open Market Operations

1. Target

Fiscal year inflation target announced by the Minister of Finance in the government’s budget presentation

2. Benchmarks

Quarterly benchmarks for monetary base developed by BOJ in financial programming framework

3. Operational Indicators

Monthly and weekly forecasts of variables affecting central bank balance sheet

Main indicators are credit to public sector and to financial institutions, interest rates, exchange rates, net international reserves

4. Assessment of Open Market Operations Required

Weekly meeting of BOJ Economic Policy Committee to discuss the following week’s objective (Thursdays a.m.)

Weekly meeting of Economic Program Monitoring Committee (BOJ Governor & Minister of Finance) to finalize weekly objective (Fridays noon)

Daily specification of volume of open market operations needed for the day (or the interest rate desired) by BOJ Open Market Committee (8:30 a.m.)

Instructions given to trading room on the open market operations required

5. Trading Room Contact with Primary Dealers

Traders contact primary dealers by telephone (9:30 a.m.) to discuss new market developments, market sentiment, assessment of trading conditions, particularly potential market receptiveness to the day’s open market objective

6. Execution of Trades

Primary dealers and traders make binding commitment by telephone on the size and price of the trade consistent with the volume of transactions required for the day (12:30 p.m.)

Backroom Activity:

Settlement is made with book transactions (12:30 p.m.)

7. Commercial Banks Contact BOJ

Banks call BOJ and arrangements are made for credit to banks, repos, special deposits (4:00–5:30 p.m.)

8. Review of Trades and Adjustment to Next Day’s Objectives

Final report on trading activity is prepared for Open Market Committee (5:30 p.m.)

Objective for open market operations for the following day is adjusted (step 4) based on the outcome of trading

37. For FY 1996, base money was targeted to grow in a range of 11 to 15 percent, which the BOJ deemed to be consistent with the inflation target of 10–12 percent.22 As it turned out, the growth of base money was 15.2 percent. Inflation, as measured by the 12 month change in the consumer price index, was 9.5 percent in FY 1996, a sharp decline from the 31 percent of FY 1995 (Table 4). Achievement of the base money target required a sizable increase in open market operations to counter expansionary impulses emanating from BOJ liquidity support to financial institutions, a buildup in net international reserves, and the net withdrawal of government deposits at the central bank.

Table 4.Jamaica: Bank of Jamaica Operations—Factors Affecting Base Money 1/
Change in:FY 1995FY 1996FY 1997
Net international reserves22.911.1-5.4
Net domestic assets-0.64.113.7
Net credit to public sector7.94.756.8
Open market operations-24.8-45.7-41.4
Net credit to banks25.533.55.3
Other-9.211.6-6.9
Base money22.315.29.4
Memorandum items (end of period):
Year-on-year inflation30.59.58.8
30-day reverse repo rate (end of period)43.518.029.0

In percent of base money at the beginning of the period.

In percent of base money at the beginning of the period.

38. Liquidity accommodation in the form of repurchases was provided to commercial banks frequently in FY 1996. These repurchases were issued for very short periods, usually one day. At the same time, the BOJ also participated in the reverse repo market almost daily in order to absorb excess liquidity from banks in a stronger position, thereby avoiding a rush toward foreign exchange. Net central bank credit to the public sector amounted to J$12 billion (5 percent of GDP) while the BOJ’s net international reserves increased by US$152 million.

39. In order to maintain the target for base money in such a context, the volume of reverse repos outstanding more than doubled, from J$8 billion at March 1996 to over J$20 billion a year later. The rapid expansion of open market operations led to a severe tightening of liquidity in the banking system. It also contributed to a nominal appreciation of the domestic currency, completely reversing by June 1996 the depreciation that had occurred during the September 1995–March 1996 period.23 The nominal interest rate on 30-day reverse repos declined from 44 percent to 18 percent over the fiscal year. This decline corresponded closely with the downward trend in inflation and there was little change in real interest rates (Figure 2).

Figure 2.Jamaica Selected Financial Indicators, 1996–March 1998

Sources: Jamaican Authorities; and Fund staff estimates.

40. The inflation target for FY 1997 was a range of 8–9 percent, with the associated base money target growth at 9.8 percent.24 Both targets were met: inflation was 8.8 percent and base money grew by 9.4 percent. As in 1996, there was heavy reliance on open market operations. The principal expansionary influence in FY 1997 came from the growth of credit to the public sector arising from the need to finance a widening fiscal deficit. There was a great deal of pressure in the foreign exchange market in FY 1997, with heightened expectations of depreciation of the Jamaica dollar related to the crisis in the financial sector and later surrounding the general elections held in December 1997. In attempting to limit exchange rate movements, the central bank sold foreign currency and simultaneously raised the rate paid on its reverse repos. The BOJ’s net international reserves declined by US$53 million and the 30-day reverse repo rate rose from 18 percent to 29 percent implying a real increase of 11 percentage points.

41. The central bank was quite aggressive in its open market sales during FY 1997, particularly during the first and final quarters, to counteract, respectively, the impact of the drawdown in government deposits and the instability in the foreign exchange market. The value of outstanding reverse repos and “special deposits” that the BOJ utilized for its open market operations expanded by 60 percent to J$32 billion, equivalent to the value of base money.25

C. Recent Changes in Legislation

42. Prompted by the problems experienced in the financial sector, legislation was amended in 1997 aimed at improving the supervisory power of the BOJ over commercial banks, near banks and building societies.26 In addition, capital requirements of these institutions were raised, and further limits were placed on their granting of unsecured credit and credit to related parties. The existing prudential requirements in relation to the Basle Accord standards are summarized in Box 6. The BOJ has also prepared draft regulations which will set the minimum risk-based capital standards required of licensees. The regulations would introduce the concepts of Tier I and Tier II capital, define the eligible components, and provide the framework for assigning risk weights to on- and off-balance sheet items.27 Money laundering legislation was passed in 1997, and an Act to provide for deposit insurance was approved in March 1998, covering deposits up to J$200,000 (about US$5,500).

D. Conclusion

43. The BOJ’s success in reducing inflation in FY 1996 and FY 1997 has fortified its reliance on the targeting of base money as the appropriate monetary variable. The BOJ will continue to use this framework in FY 1998: the target range for inflation is 6 to 8 percent and base money will be constrained to grow by 8 percent.28 Open market operations are intended to remain the cornerstone of monetary policy.

44. In the context of high real interest rates, continued reliance on open market operations on the scale that the BOJ has been dealing is a very costly undertaking. It ultimately represents a fiscal cost, irrespective of whether the interest expenses initially appear on the books of the government or the central bank (through transfers to the government of net profits).29

Box 6.Jamaica: New Financial Legislation in Jamaica

In 1997 amendments were made to the Banking Act, the Financial Institutions Act, the Building Societies Act, and the Industrial and Provident Societies Act which govern the activities respectively of commercial banks, near banks (merchant banks, trust companies, and finance companies), building societies, and registered small business societies. The main thrust of the amendments was to increase the supervisory powers of the Bank of Jamaica on these institutions, tighten capital requirements, further restrict credit to related parties, and improve auditing. Fees for breaches of the acts were also increased. In March 1998 a Deposit Insurance Act was passed, providing for insurance for deposits of banks and near banks up to a limit of J$200,000 (US$5,500), to be funded by premiums paid by these institutions. The Bank of Jamaica has issued guidelines for the review of loan portfolio, the classification of loans, loan loss provisioning, loan renegotiating, the suspension of interest accrued on past due loans, and write-off procedures.

The minimum capital required for commercial banks is J$80 million (US$2.2 million) and J$ 25 million (US$0.7 million) for near banks. Minimum capital adequacy is stated in relation to deposit liabilities and other indebtedness for borrowed money which together with all accrued interest should not exceed 25 times the capital base (20 times for near banks). Reserve funds are to be established that should receive at least 15 percent of net profits of each year (prior to the distribution of dividends), if the reserves are less than 50 percent of the assigned capital, and subsequently at least 10 percent of net profits per year until the reserves equal total paid-up capital.

There are limits on concentration of credit, the size of unsecured loans, and loans to related parties. Commercial banks, near banks, and building societies are subject to a reserve requirement on domestic deposits in the form of non-interest-bearing deposits at the central bank and additional liquidity requirements which can be satisfied with certain types of government securities. Reserve and liquidity requirements are also applied to foreign currency deposits of banks and near banks.

Jamaica: Commercial Bank Prudential Requirements, as of May 30, 1998
RequirementBasle CommitteeJamaica
Minimum capital for new banksNo guidance.Minimum US$2.2 million.
Minimum capital adequacy ratioTotal capital to risk weighted assets of at least 8 percent.Deposit liabilities, other indebtedness for borrowed money and interest accrued thereon not to exceed 25 times capital base. (Regulations are pending to introduce risk-based capital ratio).
Maximum loans to one borrowerNot more than 25 percent of total capital.20 percent of capital base to a single borrower (10 percent limit for unsecured credit); 40 percent of capital to a group (20 percent unsecured). The limits do not apply in the case of government bodies.
Maximum loans to related partiesNo guidance, but special attention needed.20 percent of capital base to a single borrower (10 percent limit for unsecured credit); 40 percent of capital to a group; (5 percent for unsecured credit).
Liquidity ratiosGuidelines on measuring and managing liquidity risk.Requirements to hold cash at the central bank and government securities of at least 47 percent of domestic deposit liabilities.
Foreign exchange exposurePosition limits recommended.Requirements to hold foreign currency at the central bank and designated foreign liquid assets of at least 40 percent of foreign currency deposit liabilities.
Sources: Carl-Johan Lindgren, Guillian Garcia, and Matthew I. Saal, 1996, Bank Soundness and Macroeconomic Policy (Washington: International Monetary Fund); and Bank of Jamaica.
Sources: Carl-Johan Lindgren, Guillian Garcia, and Matthew I. Saal, 1996, Bank Soundness and Macroeconomic Policy (Washington: International Monetary Fund); and Bank of Jamaica.

45. On the legislative front, a Parliamentary Committee is currently considering BOJ proposals for a more autonomous central bank, which include putting further restrictions on the credit that can be provided to the government, and making the Governor of the BOJ accountable to Parliament, as opposed to the Minister of Finance.30

III. The Role of the Public Sector

A. Introduction

46. From the early 1970s to mid-1980s, Jamaica experienced a poor economic growth performance as the government took over an increasing role in the economy in an attempt to control the “commanding heights” of the economy. At a time when private sector activity diminished, the Jamaican economy was faced with the adverse terms of trade shocks of the 1970s and early 1980s. The situation improved in the late 1980s in the wake of successful stabilization efforts coupled with large scale privatization programs and other structural reforms aimed at reducing government intervention. By 1990 Jamaica was considered to be a leader among the countries in Latin America and the Caribbean in terms of the number of enterprises that had been privatized or earmarked for privatization.31 Other advances on the structural front in the early 1990s also were substantial, including the liberalization of the foreign exchange market, an elimination of nontariff barriers, a liberalization of prices and interest rates, and a rationalization of the tax system. Nevertheless, despite some successes in the second half of the 1980s, average output growth over the last 25 years has been dismal and total measured output in real terms in 1997 was almost equivalent to that in 1973 implying a large decline in per capita terms (Table 5).

Table 5.Jamaica: Macroeconomic Indicators, 1962–97
1962–971962–721973–971973–801981–901991–9719961997
Real GDP growth1.85.80.2-2.42.50.0-1.9-2.4
Inflation (period average)17.14.922.721.815.234.526.49.7
Current account (in percent of GDP) 1/n.a.n.a.-5.2-3.9-7.5-2.7-2.5-5.4
Central government balance (in percent of GDP) 2/n.a.n.a.-4.4-18.8-4.80.2-6.8-8.9
Sources: IMF. International Finance Statistics; Planning Institute of Jamaica; Economic and Social Survey Jamaica.

Current account in U.S. dollars times average exchange rate. Averages cover the period 1976–97 only.

Refers to fiscal year balances as a percent of calendar year GDP. Averages cover the period 1979–97 only.

Sources: IMF. International Finance Statistics; Planning Institute of Jamaica; Economic and Social Survey Jamaica.

Current account in U.S. dollars times average exchange rate. Averages cover the period 1976–97 only.

Refers to fiscal year balances as a percent of calendar year GDP. Averages cover the period 1979–97 only.

47. The causes for Jamaica’s poor growth record seem to be twofold. On the one hand, Jamaica’s poor growth performance is associated with relatively high and varying inflation rates, external and internal imbalances (Figure 3) and frequent changes in fiscal, monetary, and exchange rate policies that prevented a resumption of long-run economic growth. On the other hand, it appears that some of the structural reforms have not fully been implemented, raising the key questions of whether and to what extent the government remains a key player in the economy. This note concentrates on the analysis of how the role of the government has changed over time, to what degree the government continues to be a major player in the economy, and analyses some of the more recent interventions.

Figure 3.Jamaica: Selected Indicators, 1979–97

Sources: Ministry of Finance; Bank of Jamaica; Planning Institute; International Financial Statistics.

1/ Fiscal year outturn as a percent of calendar year GDP.

B. Background

48. Prior to Jamaica’s independence in 1962, the role of the government in the economy was limited to the provision of traditional public services such as health and education, and assistance to the agricultural sector and small businesses in the manufacturing sector through a number of publicly owned development finance institutions, such as the Jamaica Industrial Development Corporation. After independence, the role of the government remained limited focusing on the establishment of regulatory agencies such as the Public Utilities Commission, the enforcement of property rights, and a stable fiscal and monetary policy. During the first decade of its independence, Jamaica experienced relatively high overall growth rates averaging almost 6 percent a year. However, growth was not balanced across sectors concentrating largely in the capital intensive mining sector while output in the labor intensive agricultural sector declined leading to an increase in unemployment from 13 percent in 1962 to 23 percent in 1972 and a greater skewness of the income distribution.32

49. In the latter part of the 1960s and especially after the then socialist-oriented People’s National Party (PNP) won the 1972 national elections, direct government involvement in the allocation of resources increased substantially, justified by the perceived need to address the issue of income disparity and high unemployment, and later—as private sector activity contracted—also to prevent failing companies from going bankrupt. Throughout the 1970s and early 1980s, the government acquired a large number of key industries—such as bauxite, sugar, textiles, cement—and took over banks and hotels. According to the 1984 Public Sector Registry, the government then owned 199 public enterprises.33

C. The Role of the Government Since the 1980s

The divestment of public ownership

50. In the mid-1980s Jamaica began a privatization program that lasted for a decade (Figure 4). From 1984 to 1997, the Jamaican Government sold its holdings in 66 public entities generating gross receipts amounting to 13 percent of GDP (for Jamaica’s current privatization program see Box 7)34. The divestment effort was not limited to any particular sector but ranged from tourism to banking and agriculture, including large public service monopolies such as the Telephone Company of Jamaica (TOJ) and the national airline carrier AirJamaica (see Appendix II for a summary list of privatized enterprises and sale of lands). Although employment data for the overall public sector is not available, the retrenchment of the government during the 1980s is mirrored in the reduction of people directly employed by the central government. While in the late 1970s, almost 12 percent of the total labor force was on the payroll of the central government, this percentage had fallen by almost 50 percent in 1987. In addition, the reduction of government activity in the economy was also reflected in a fall in central government expenditure as a percentage of GDP; while in the early 1980s government expenditure amounted to more than 40 percent of GDP it had fallen below 30 percent by the early 1990s.

Figure 4.Jamaica: Privatization and Public Sector Developments

Sources: Ministry of Finance; and Planning Institute.

1/ The series covers the period 1978–82, 1985–87, and 1990–97.

2/ Employment financed through the consolidated budget of the central government.

3/ Central government.

51. Despite the formal retrenchment of the government and the reduction in public ownership since the mid-1980s, the questions arise whether and to what extent the government is still involved in economic decision making that could adversely affect the allocation of resources and hence prevent the economy from moving toward a higher long-term growth path. The required analysis is, of course, hampered by the very fact that formally the structure of the economy has changed and standard measures such as the number of totally government-owned enterprises, the share of public sector output in total value added, and the ratio of public sector employees in terms of the total labor force, etc., are potentially misleading because they do not reflect the considerable influence the government exerts directly through its remaining holdings and indirectly by providing financial support to selected economic activities. Hence, the following attempts to provide mostly qualitative evidence.

Box 7.Jamaica: The Government’s Current Privatization Program

Formally, the current privatization program is based on a Ministry Paper published in 1991. It establishes the institutional responsibilities, defines the objectives of the program, as well as the modalities of privatization. The direction and the approval of the privatization program is determined by Cabinet and does not require parliamentary support. A cabinet committee advises cabinet on which enterprises to privatize, on how the government should divest of its assets, and makes recommendations on whether cabinet should accept or reject an offer. The privatization strategy is developed in the Prime Minister’s Office and subsequently submitted to both the cabinet committee and Cabinet itself. The National Investment Bank is charged with the execution and implementation of the privatization program. The Ministry Paper suggests that privatization is part of a general strategy to liberalize the economy and to promote the market forces. Formally, the objectives of privatization are to increase efficiency, to reduce the fiscal burden of the government, to optimize government management resources, to obtain access to international capital and technology, and to broaden ownership.

Continued government influence

52. As the 1997 public registry indicates, the portfolio of government entities is still substantial (Table 6). Although some of these entities have some public policy function and hence are not likely to be divested, the list still includes large public monopolies such as the local petroleum refinery (Petrojam), the electric utility (JPSCO), the water company (National Water Commission), and smaller commercial entities such as the Ocho Rios Commercial Centre. In addition, the recent collapse of many of the domestically owned financial entities has resulted in the de facto renationalization of many of the financial companies (see the section on financial sector developments in this paper) and to the government acquisition of related assets, such as hotels and real estate. In addition, most of Jamaica’s industry and marketing boards have neither been abolished nor privatized. In the past, many developing countries such as Jamaica relied on industry or marketing boards as a means of executing public policy, such as setting producer prices for export products.35 Despite the fact that Jamaica has privatized export industries, the government continues to name board members and set policies for most key export industries through marketing boards such as the Coffee Industry Board, the Banana Board, the Cocoa Industry Board, the Coconut Industry Board, the Sugar Industry Authority, the Agricultural Marketing Board, as well as the Jamaica Tourism Board. The continued involvement of the government through the boards has prevented some of the industries from competing freely and from facing hard budget constraints, generating losses with no apparent benefit. Moreover, most of the subsidies provided by the government are aimed at the largest producers within each sector, in which the government generally has an interest, stifling the development of the smaller producers, and limiting efficiency gains.

Table 6.Jamaica: Stock of Public Enterprises, 1997 1/
Public EnterprisesNumberPublic

Ownership
Statutory Bodies60100.0
Wholly-owned limited liability companies59100.0
Partly-owned limited liability companies14
Kingston Waterfront Hotel Company95.0
Montego Freeport82.0
Jamaica Unit Trust Services72.4
Jamaica Aqualapia71.0
Cotton Polyester Textile Company54.0
Clarendon Distilleries51.0
Innswood Distillery51.0
Kingston Industrial Work International42.0
Jamaican Sugar Company33.3
Bloody Bay Hotel Development33.3
Ashtrom Building Systems26.0
Air Jamaica25.0
Air Jamaica Express20.0
Jamaica Broadcasting Co.10.0
Total133
Source: Ministry of Finance and Planning. 1997. List of Government Entities and Portfolio Ministries (preliminary).

Excludes holdings acquired as a result of support to the financial system.

Source: Ministry of Finance and Planning. 1997. List of Government Entities and Portfolio Ministries (preliminary).

Excludes holdings acquired as a result of support to the financial system.

53. Furthermore, even in the case where public entities have been privatized, a closer analysis reveals that in many cases, the government continues to hold substantial ownership stakes ranging from 10 percent in the case of the Jamaica Broadcasting Company to 95 percent in the case of the Kingston Waterfront Hotel Company. According to the Jamaican company law, owners controlling more than 25 percent of the shares in a company have veto power over management decisions and hence, indirectly, the government can exercise substantial control over the management and operation of companies.

54. In addition to maintaining partial ownership stakes in “privatized” enterprises, in critical instances the government has bailed out recently privatized private companies that have run into financial difficulties. Failing to impose “hard budget constraints” leads to moral hazard or rent seeking behavior. Two recent examples of bailouts are the national airline (AirJamaica) and the sugar industry which were privatized in 1994 and 1993, respectively. When the airline ran into financial difficulties, the government provided foreign creditors with guarantees and letters of comfort for about US$140 million (about 2 percent of GDP) of which US$114 million were eventually assumed as debt by the central government. In addition, the government provided direct loans to cover cash-flow shortfalls of US$30 million.36

55. In the case of the Jamaica Sugar Company, which accounts for about 70 percent of Jamaica’s annual sugar production and enjoys preferential access to the European market under the Lomé agreements, the company has been running losses due to production costs that are reported to be twice as high as world market prices. Intentions by the company’s management to reduce the work force by 16 percent were stopped by the government, which instead appointed a tripartite (labor, company, government) task force to prevent any layoffs.37 To compensate the company, the government has chosen to provide government guarantees for loans of US$100 million in fiscal year 1998.38 Furthermore, during the wage negotiations of early 1998 in which the sugar companies initially declined to provide wage increases, the government brokered an agreement that resulted in wage increases of 10 percent a year for two years, of which the government will pay 2.5 percentage points in year one and 5 percentage points in year two. Other industries in distress have received substantial financial government support among them the Coffee Industry Board and the local citrus industry.39

Incentive schemes and budgetary support

56. The government also relies on a multifaceted system of tax incentives. Many of these incentive schemes are nontransparent, are based on numerous pieces of legislation, and are highly discretionary. The effectiveness of some of these incentive schemes is questionable—it appears that many companies cease to exist after the incentive period expires while the same owners establish new companies to request new tax breaks—while they encourage rent seeking behavior rather than the establishment of commercially viable enterprises by the private sector and generate a substantial fiscal burden in the form of revenue forgone. Although no official data are collected on the fiscal implications, estimates suggest that the revenue loss due to tax incentives could have amounted to some J$7 billion (3 percent of GDP) in 1996.

Increased government employment, spending, and financial support

57. Central government employment has increased substantially and it appears that the government may become an employer of last resort. After reducing employment in the central government (as a proportion of wage earners) from 19 percent in 1990 to about 15 percent in 1994, the proportion increased to almost 18 percent in 1997. The trend toward a growing public sector also is reflected in government non-interest expenditure as a percent of GDP, which has grown from an average of about 21 percent of GDP for the period 1990–95 to about 26 percent of GDP in 1997.

58. The increased involvement of the government in the economy is often justified on the grounds of the stagnation of output which gave rise to the government’s National Industrial Policy (Box 8). The new policies are reflected, for example, in the National Development Bank of Jamaica (NDB) which since 1997 provides direct lending to the industrial sector of the economy.40 Initially, the mandate of NDB had been to channel funds to approved financial institutions (AFIs) such as commercial and merchant banks as well as other financial institutions which, in turn, would engage in the actual lending operations and bear the resulting credit risk. Enterprises that seek funds from NDB directly are likely to be those that could not pass the AFI’s requirements in terms of their expected return on investment, or their equity base.

59. Along the lines of the NDB, another public agency, the National Investment Bank of Jamaica (NIBJ), has also changed its policies to support of the National Industrial Policy. While during the early 1990s NIBJ was officially responsible for implementing Jamaica’s privatization program and functioned as the privatization agency, since 1996 it has been given the mandate of providing equity capital to private enterprises. In addition to developing a bailout program for hotels, NIBJ intends to inject capital into medium-sized businesses in agriculture, mining, tourism, and manufacturing. Such equity investments will require the presence of government representatives on the boards of these enterprises. During the last budget presentation, the government announced that it would step up interest subsidy programs through the Export-Import Bank, the Agricultural Development Bank, NDB, and NIBJ.

Box 8.Jamaica’s National Industrial Policy

The government’s current view on the role of the public sector is reflected in its 1996 National Industrial Policy whose official focus is to foster economic growth and development. The objective of the strategy is to grow by 6 percent a year so as to more than double the current level of income per capita to US$4,000 by the year 2010. Although the program expresses the commitment to a “market-driven economy” and acknowledges that the private sector is the main engine of growth, it calls on the government to spearhead the development effort by adopting “focused policy interventions.” Jamaica’s Industrial Policy is summarized in the following statement: “The strategic focus of the [National Industrial] Policy is (i) export push, through building and sustaining targeted areas of competitive advantage in the national economy, and (ii) efficient import substitution, consistent with the focus on international competitiveness as the key element of the policy” (JIS 1996:4).

D. Conclusions

60. Compared to the structure of the economy in the late 1970s and early 1980s, the Jamaican economy has been drastically transformed. Nevertheless, the Jamaican Government continues to be omnipresent either through direct or partial ownership of productive enterprises and marketing boards, a nontransparent system of incentives, selective support of entities, and increased employment.

61. In the past two years, the government has bailed out inefficient and undercapitalized industries through subsidies, government guarantees, or equity participation. The subsidies, increases in government debt, and assumption contingent liabilities in the form of government guarantees and letters of comfort, can have substantial macroeconomic implications, lead to a reduction of the net worth of the government, and eventually result in higher taxes. The growing share of wage earners working in the public administration also seems to indicate that the government is becoming an increasingly important employer in the context of a stagnant economy.

62. A resumption of sustainable economic growth will require—in addition to a stable macroeconomic environment—a substantial rationalization of public sector activities, a revitalization of the privatization program, and the enforcement of hard budget constraints on the private sector.

STATISTICAL APPENDIX
Table 7.Jamaica: Gross Domestic Product by Final Expenditure
1993199419951996Prel.

1997
(In millions of Jamaica dollars)
Consumption82,846108,983146,814176,140194,291
General government13,55316,49523,39331,72240,229
Private 1/69,29392,488123,421144,418154,062
Gross fixed capital formation 2/33,78143,49957,90170,02276,500
Inventory accumulation726333586546590
Net exports-10,047-10,093-20,770-26,634-31,901
Exports of goods and nonfactor services57,83583,815103,263111,579113,922
Imports of goods and nonfactor services-67,882-93,908-124,033-138,213-145,823
GDP at current market prices107,306142,722184,531220,074238,890
(In percent of GDP)
Consumption77.276.479.680.081.3
General government12.611.612.714.416.8
Private 1/64.664.866.965.664.5
Gross fixed capital formation 2/31.530.531.431.832.0
Inventory accumulation0.70.20.30.20.2
Net exports-9.4-7.1-11.3-12.1-13.4
Exports of goods and nonfactor services53.958.756.050.747.7
Imports of goods and nonfactor services-63.3-65.8-67.2-62.8-61.0
Sources: Statistical Institute of Jamaica; and Fund staff estimates.

Includes public enterprises.

There is no data on the distribution of capital formation between the public and private sectors.

Sources: Statistical Institute of Jamaica; and Fund staff estimates.

Includes public enterprises.

There is no data on the distribution of capital formation between the public and private sectors.

Table 8.Jamaica: Savings and Investment
1993199419951996Prel.

1997
(In millions of Jamaica dollars)
Gross capital formation 1/34,50743,83258,48770,56877,090
Fixed capital formation33,78143,49957,90170,02276,500
Inventory accumulation726333586546590
Gross national savings19,49230,70534,06939,986
Foreign savings15,01513,12724,41830,582
(In percent of GDP) 1/
Gross capital formation 1/32.230.731.732.132.3
Fixed capital formation31.530.531.431.832.0
Inventory accumulation0.70.20.30.20.2
Gross national savings18.221.518.518.2
Foreign savings14.09.213.213.9
Memorandum item:
GDP at current market prices (in millions of Jamaica dollars)107,306142,722184,531220,074238,890
Sources: Statistical Institute of Jamaica; and Fund staff estimates.

There is no data on the distribution of capital formation between the public and private sectors.

Sources: Statistical Institute of Jamaica; and Fund staff estimates.

There is no data on the distribution of capital formation between the public and private sectors.

Table 9.Jamaica: Gross Fixed Capital Formation
Prel.
19931994199519961997
(In millions of Jamaica dollars
Total fixed capital formation33,78143,49957,90170,02276,500
Building construction15,41318,74726,26027,478
Other construction, including land improvement
Transport equipment6,2655,8147,2299,940
Motor cars1,8951,3821,2451,665
Trucks and buses3,8223,7554,1225,243
Other5486761,8633,041
Machinery and equipment11,19017,74522,04730,275
Agricultural380507702730
Industrial3,2395,9287,36311,241
Other7,57111,31113,98118,304
(In percent of GDP)
Total fixed capital formation31.530.531.431.832.0
Building construction14.413.114.212.5
Other construction, including
land improvement0.90.81.31.1
Transport equipment5.84.13.94.5
Machinery and equipment10.412.411.913.8
Sources: Statistical Institute of Jamaica; and Fund staff estimates.
Sources: Statistical Institute of Jamaica; and Fund staff estimates.
Table 10.Jamaica: Gross Domestic Product by Sector at Current Prices
Prel.
19931994199519961997
(In millions of Jamaica dollars)
GDP in producers’ values at current prices99,843132,377170,133203,109220,556
Agriculture forestry and fishing8,03611,94415,44716,89317,637
Export agriculture9711,1851,5371,8191,670
Domestic agriculture5,5178,65811,45411,98612,351
Livestock and hunting1,1531,5451,7912,1952,578
Forestry and logging81109149212225
Fishing315448516681812
Mining and quarrying6,3569,43511,71211,91512,281
Of which:
Bauxite/alumina6,2189,23211,45511,57811,914
Manufacturing18,10424,31328,87133,97635,906
Food3,7864,9475,8067,0797,427
Sugar, molasses, and rum8861,1321,2431,5541,482
Beverages1,9702,6263,1943,9094,547
Tobacco and tobacco products1,5742,5112,9643,6114,093
Textiles9681,5631,8942,1211,850
Petroleum refining1,9802,4052,7403,1563,660
Other6,9409,12911,02912,54712,848
Construction and installation12,34115,55521,18723,59824,833
Services55,00671,13192,917116,727129,900
Electricity and water2,1932,8394,1024,5994,402
Transportation, storage, and communication10,49314,23917,70321,87624,743
Distributive trade22,70730,29238,42045,81250,674
Financing and insurance services6,99912,34115,27218,91517,201
Real estate and business services3,9935,5377,5239,46811,174
Government services9,93310,71715,17123,05326,695
Miscellaneous services3,8385,0196,4627,9759,177
Of which:
Hotels, restaurants, and clubs2,0752,5593,2343,7464,214
Household and private non-profit institutions5598191,0841,3411,484
Less: Imputed service charges-5,709-10,672-12,820-16,311-15,649
Plus: value-added tax7,46110,34514,39716,96518,334
GDP at current market prices107,304142,722184,530220,074238,890
Memorandum item:
Nonbauxite GDP (in producers’ values)93,626123,145158,678191,531208,642
(In percent of GDP in producers’ values)
Agriculture forestry and fishing8.09.09.18.38.0
Mining and quarrying6.47.16.95.95.6
Manufacturing18.118.417.016.716.3
Construction and installation12.411.812.511.611.3
Services55.153.754.657.558.9
Of which:
Government services9.98.18.911.412.1
(Annual percentage change)
GDP at current market prices39.433.029.319.38.5
Agriculture39.148.629.39.44.4
Mining and quarrying-7.248.424.11.73.1
Manufacturing27.234.318.717.75.7
Construction and installation31.526.036.211.45.2
Services48.629.330.625.611.3
Of which:
Government services33.830.828.723.415.1
Memorandum item:
Nonbauxite GDP40.831.528.920.78.9
Source: Statistical Institute of Jamaica.
Source: Statistical Institute of Jamaica.
Table 11.Jamaica: Gross Domestic Product by Sector in Producers’ Values at Constant 1986 Prices
Prel.
19931994199519961997
(In millions of Jamaica dollars)
GDP at constant prices18,01118,21018,29417,97417,549
Agriculture, forestry, and fishing1,3401,4401,4681,5131,293
Export agriculture162157149164145
Domestic agriculture9151,0301,0591,088869
Livestock and hunting196186193193210
Forestry and logging1615151515
Fishing5053535353
Mining and quarrying1,5711,6801,5651,6831,738
Of which:
Bauxite/alumina1,5481,6541,5391,6561,711
Manufacturing3,3893,4013,3613,2573,175
Food559539587608609
Sugar, molasses, and rum9810193102103
Beverages406386350357365
Tobacco and tobacco products274283268259253
Textiles184241257228168
Petroleum refining424407352339371
Other1,4451,4441,4531,3651,307
Construction and installation1,7171,6091,7251,6321,554
Services9,99410,08110,1769,8899,789
Electricity and water799799827868916
Transportation, storage, and communication1,9742,0742,2762,4782,620
Distributive trade3,7913,8554,0084,0654,105
Financing and insurance services1,9362,9022,8382,6912,150
Real estate and business services1,4341,5061,5921,6121,558
Government services1,2341,2141,2171,2131,215
Miscellaneous services747742756756762
Of which:
Hotels, restaurants, and clubs395390405412427
Household and private non-profit institutions9810711210796
Less: imputed service charges-2,019-3,117-3,450-3,900-3,632
Memorandum item:
Nonbauxite GDP16,46316,55616,75616,31815,838
(In percent of GDP)
Agriculture, forestry, and fishing7.47.98.08.47.4
Mining and quarrying8.79.28.69.49.9
Manufacturing18.818.718.418.118.1
Construction and installation9.58.89.49.18.9
Services55.555.455.655.055.8
Of which:
Govemment services6.96.76.76.76.9
Hotels, restaurants, and clubs2.22.12.22.32.4
Memorandum item:
Nonbauxite GDP91.490.991.690.890.2
(Annual percentage change)
GDP at constant prices1.51.10.5-1.8-2.4
Agriculture, forestry, and fishing10.07.52.03.1-14.6
Mining and quarrying0.36.9-6.87.53.3
Manufacturing-1.90.3-1.2-3.1-2.5
Construction and installation-0.5-6.37.2-5.4-4.8
Services2.10.90.9-2.8-1.0
Of which:
Government services-0.4-1.60.2-0.30.1
Memorandum item:
Nonbauxite GDP1.60.61.2-2.6-2.9
Source: Statistical Institute of Jamaica.
Source: Statistical Institute of Jamaica.
Table 12.Jamaica: Output of Selected Commodities
Prel.
19931994199519961997
Major Agricultural Export Products

(In thousand metric tons)
Sugarcane2,715.02,513.02,340.02,659.02,446.0
Bananas74.275.574.378.475.3
Citrus27.752.6
Pimento1.31.63.03.00.7
Coffee1.81.62.72.73.0
Cocoa5.47.34.75.22.1
Domestic Crops

(In thousand metric tons)
Legumes11.110.010.510.18.6
Vegetables147.4192.4183.9192.4145.9
Plantains35.833.834.833.826.3
Potatoes35.947.047.647.036.0
Yams221.9253.4240.4253.4212.6
Other root crops55.366.058.266.045.9
Grains (corn and rice)3.64.13.94.13.2
Livestock Products

(In millions)
Eggs (kilo)100.0102.3102.3116.3129.0
Poultry (kilo)44.044.945.450.359.3
Milk (quarts)62.2
Fish (kilo)3.03.03.03.03.0
Bauxite and Alumina

(In thousand metric tons)
Bauxite production11,18411,78710,87111,75711,987
Alumina production3,0093,2243,0593,3653,394
Electricity Sales

(In millions of kwh)
Electricity sales1,793.01,869.11,998.02,146.82,281.1
Industrial use847.2868.9922.1972.41,041.3
Other use945.81,000.21,075.91,174.41,239.8
Manufactured Goods
Food
Poultry meat (′000 tonnes)36.240.340.04243.7
Condensed milk (′000 tonnes)19.415.315.816.515.4
Edible oil (′000 litres)7.26.76.59.511.7
Edible fats (′000 kg.)6.36.96.66.96.6
Flour (′000 tonnes)147.8147.8146.0140.6135.7
Cornmeal (′000 tonnes)15.115.613.412.110.5
Animal feeds (′000 tonnes)255.3250.0236.5288.0296.1
Sugar, molasses, and rum
Sugar (thousand tonnes)219.0224.4248.6236.0232.8
Molasses (thousand tonnes)102.594.596.095.292.2
Rum (million litres)20.621.120.420.422.4
Manufactured Goods (Concluded)
Alcoholic beverages
Beer and stout ('000 litres)78.676.066.26967.4
Nonalcoholic beverages
Aerated water ('000 litres)48.655.748.934.128.0
Tobacco products
Cigarettes (million)1,223.61,273.21,212.6633.8
Cigars (million)8.711.516.615.718.1
Textile products
Cloth ('000 metres)1.00.50.00.0
Chemicals and chemical products
Industrial gases ('000 cubic metres)
Oxygen1,155.01,087.01,123.01,131.0966.0
Acetylene244.0242.0225.0227.0200.0
Hydrogen43.032.044.053.09.0
Nitrogen45.053.056.081.08.0
Specified chemical products
Fertilizer ('000 tonnes)65.049.957.417.8
Paint ('000 litres)7.98.47.788.5
Putty ('000 kg.)13.020.012.02020.0
Cleansing products (million kg.)
Soap3.73.60.90.00.0
Detergents6.75.52.40.00.0
Petroleum products (million litres)
Fuel oil and diesel641.0626.9561.8536.2566.4
Gasoline129.3151.2159.3109.8113.6
Other147.7157.8135.574.273.9
Rubber products (thousands)
Tires359.1351.6145.778.2
Cement and clay products
Concrete ('000 cubic meters)119.6114.2142121.6142.5
Cement ('000 tonnes)440.6445.3517.5559.3588.1
Metal products
Steel ('000 tonnes)3.40.00.00.00.0
Sources: Statistical Institute of Jamaica; and Planning Institute of Jamaica.
Sources: Statistical Institute of Jamaica; and Planning Institute of Jamaica.
Table 13.Jamaica: Selected Information on the Bauxite/Alumina Sector
Value AddedBauxite Production 1/
(In millions of

1986 Jamaica

dollars)
(Annual

percentage

change)
Direct Exports
TotalLevel(In percent

of total)
Alumina

Production 1/
19741,754.59.515.27.851.32.8
19751,347.0-23.211.45.548.22.3
19761,106.9-17.810.36.361.21.6
19771,288.916.411.46.456.12.0
19781,325.72.911.76.555.62.1
19791,306.1-1.511.56.556.52.1
19801,434.19.812.06.150.82.5
19811,437.50.211.65.446.62.6
19821,029.8-28.48.14.150.61.8
19831,011.9-1.77.73.039.01.9
19841,050.83.88.64.653.51.8
1985822.6-21.76.22.337.11.5
1986886.87.86.92.942.01.6
1987940.06.07.73.748.11.6
1988897.2-4.67.33.547.91.5
19891,221.736.29.54.244.22.2
19901,503.323.011.03.935.52.9
19911,587.35.611.64.337.13.0
19921,544.2-2.711.44.136.02.9
19931,547.90.211.23.934.83.0
19941,654.46.911.83.630.53.2
19951,538.9-7.010.93.532.13.1
19961,655.77.611.83.933.13.4
19971,711.33.412.03.630.03.4
Source: Statistical Institute of Jamaica.

Millions of metric tons; unless otherwise indicated.

Source: Statistical Institute of Jamaica.

Millions of metric tons; unless otherwise indicated.

Table 14.Jamaica: Employed Labor Force by Industry 1/
Prel.
19931994199519961997
(In thousands)
Total employed labor force904.7923.8960.5958.3948.6
Agriculture, forestry, and fishing220.1217.7220.2219.9206.4
Mining8.46.26.76.45.7
Manufacturing98.995.0105,599.186.0
Electricity, gas, and water4.75.36.67.16.3
Construction61.367.576.381.180.1
Wholesale and retail, hotels, and restaurant services189.2194.8199.8197.7198.5
Transport, storage, and communication39.539.245.349.054.5
Financing, insurance, real estate and business services43.647.853.154.860.9
Community, social, and personal services228.4237.6246.4242.8249.0
Industry not specified10.812.90.80.61.4
(In percent of employed labor force)
Total100.0100.0100.0100.0100.0
Agriculture, forestry, and fishing24.323.622.922.921.8
Mining0.90.70.70.70.6
Manufacturing10.910.311.010.39.1
Electricity, gas, and water0.50.60.70.70.7
Construction6.87.37.98.58.4
Wholesale and retail, hotels, and restaurant services20.921.120.820.620.9
Transport, storage, and communication4.44.24.75.15.7
Financing, insurance, real estate and business services4.85.25.55.76.4
Community, social, and personal services25.225.725.625.326.2
Industry not specified1.21.40.10.10.1
Memorandum items:
Population (thousands)2,472.42,494.92,484.62,515.32,521.6
Total labour force (thousands)1,079.71,089.91,149.61,143.61,135.1
Participation rate (in percent) 2/68.168.169.067.766.6
Unemployment rate (in percent) 3/16.215.316.516.216.5
Job-seeking rate (in percent) 4/7.17.46.57.07.2
Source: Statistical Institute of Jamaica.

Population, labor force, and employment data are averages of April and October sample labor force surveys.

Defined as the ratio of the total labor force to the population 14 years old and over.

Defined as the proportion of the labor force that is not employed.

Job-seekers as a proportion of the labor force.

Source: Statistical Institute of Jamaica.

Population, labor force, and employment data are averages of April and October sample labor force surveys.

Defined as the ratio of the total labor force to the population 14 years old and over.

Defined as the proportion of the labor force that is not employed.

Job-seekers as a proportion of the labor force.

Table 15.Jamaica: Average Weekly Earnings in Large Establishments 1/
1993199419951996Prel.

1997
(In current Jamaica dollars)
Mining4,4295,8656,0426,8897,760
Manufacturing1,3391,9742,5473,1594,106
Electricity, gas, and water4,4545,1347,6048,4259,044
Construction1,7352,3543,0783,4824,110
Trade, hotels, and restaurants1,3101,7682,5633,0813,524
Transport, storage, and communications2,4583,7486,4828,2339,312
Financing, insurance, real estate, and business services2,3293,4684,3715,8977,196
Community, social, and personal services1,5682,0992,2243,1643,419
All sectors1,7972,5593,4384,2975,177
(Index: 1986 = 100)
Mining7119429711,1071,247
Manufacturing4927269371,1621,510
Electricity, gas, and water1,1631,3401,9852,1992,361
Construction6378641,1301,2791,509
Trade, hotels, and restaurants4886599551,1481,313
Transport, storage, and5388201,4181,8012,037
communications
Financing, insurance, real estate, and business services6409521,1211,5121,845
Community, social, and personal services5807768221,1691,264
All sectors5678071,0841,3551,632
(Percentage change)
Memorandum items:
Nominal wage (all sectors)59.042.434.325.020.5
Consumer prices (end of period)30.126.825.615.89.2
Real wage22.212.37.07.910.4
Source: Statistical Institute of Jamaica.

Excluding agriculture, government, and employees in Free Zones.

Source: Statistical Institute of Jamaica.

Excluding agriculture, government, and employees in Free Zones.

Table 16.Jamaica: Consumer Price Index
1993199419951996Prel.

1997
I. Calendar Year
(January 1988 =100)
Average470.6635.6762.1963.41,056.5
Food and beverages506.1700.3841.51,045.71,127.9
Fuel and other household supplies454.6564.8643.3941.51,029.2
Housing362.5486.3579.4686.5767.6
Household, furnishings, and furniture368.1468.2550.6699.3745.2
Personal clothing and accessories514.0640.4750.1946.91,103.1
Healthcare and personal expenses458.3590.5686.3855.3966.6
Transportation383.5511.7618,7832.5863.5
Miscellaneous452.8621.6795.71,035.91,234.3
End of period546.0692,3869.21,006.91,099.2
Food and beverages595,8758.5966.61,083.11,179.8
Fuel and other household supplies504.2598.6820,9990.01,062.0
Housing408.5541.7636.0724.0797.8
Household, furnishings, and furniture423.8482.3629.5710.5768.0
Personal clothing and accessories580.0675.8838.61,029.61,138.9
Healthcare and personal expenses523.4634.4748.6912.1992.4
Transportation424.4578.7665.3855.2873.1
Miscellaneous536.8727.7886.61,114.71,291.5
(Percentage change)
Average22.135.119.926.49.7
Food and beverages21.138.420.224.37.9
Fuel and other household supplies12.224.213.946.49.3
Housing13.734.219.118.511.8
Household, furnishings and furniture23.026.817.627.06.6
Personal clothing and accessories31.624.617.126.216.5
Healthcare and personal expenses26.728.816.224.613.0
Transportation24.533.420.934.63.7
Miscellaneous36.337.328.030.219,2
End of period30.126.825.615,89,2
Food and beverages31.827.127.412.18.9
Fuel and other household supplies18.618.837.120.67.3
Housing20.932.617.413.810.2
Household, furnishings, and furniture30.313.830.512.98.1
Personal clothing and accessories24.916.624.122,810.6
Healthcare and personal expenses32.021.218.021.88.8
Transportation34.036.315.028.52.1
Miscellaneous36.835.621.825.715.9
II Fiscal Year 1/
(January 1988 = 100)
Average502.0668.8814.1989.31,079.0
Food and beverages542,3736.1901.01,064.81,153.0
Fuel and other household supplies476.2584.3711.1972.81,044.9
Housing362.2518.3601.8709.6788.3
Household, furnishings, and furniture392.4479.3594.4713.1759.8
Personal clothing and accessories541,3660.0799.1991.01,125.7
Healthcare and personal expenses485.5620.1719.2893.7996.9
Transportation408.5547.7664.1851.5858.5
Miscellaneous expenses487.4665.4846.21,093.01,270.8
End of period590.6715.8936.41,025.51,115.9
Food and beverages649.2771.91,028.11,091.31,188.8
Fuel and other household supplies542.9600.9903.21,007.81,085.7
Housing439.2589.8655.1750.6825.1
Household, furnishings, and furniture460.7489.2688.5729.0766.4
Personal clothing and accessories617.5672.7901.51,064.91,150.6
Healthcare and personal expenses549.5671.9801.6957.91,012.9
Transportation459.7626.9838.8859.6873.3
Miscellaneous572.4746.5961.41,173.51,365.3
(Percentage change)
Average24.333.221.721.59.1
Food and beverages-4.235.722.418.28.3
Fuel and other household supplies13.822.721.736.87.4
Housing10.043,116.117.911.1
Household, furnishings, and furniture24.522.124.020.06.5
Personal clothing and accessories27.621.921.124.013.6
Healthcare and personal expenses34.027,716.024.311.5
Transportation28.834.121.328.20.8
Miscellaneous expenses36.636.527,229.216.3
End of period37.121.230,89.58.8
Food and beverages40.418.933.26.18.9
Fuel and other household supplies26.710.750.311.67.7
Housing29.834.311.114.69.9
Household, furnishings, and furniture36.46.240.75.95.1
Personal clothing and accessories27.78.934.018.18.0
Healthcare and personal expenses27.322.319.319.55.7
Transportation39.036.433.82.51.6
Miscellaneous43.930.428.822.116.3
Source: Statistical Institute of Jamaica.

Fiscal years begin on April 1.

Source: Statistical Institute of Jamaica.

Fiscal years begin on April 1.

Table 17.Jamaica: Public Sector Balance and Financing
1993/941994/951995/961996/97Prel.

1997/98
(In millions of Jamaica dollars)
Central government3,6174,7933,806-14,967-21,436
Rest of general government1,2043,052121,6962,117
Selected public entities5491,143-799-1,018-982
Bank of Jamaica losses-2,036-3,0781,1592,744-207
Others and discrepancy-1,7641922,016-1,394-1,427
Overall public sector balance1,5696,1036,195-12,938-21,936
Financing-1,569-6,103-6,19512,93821,936
Foreign financing-200-898-3,004-2,1372,843
Domestic financing-1,369-5,205-3,19115,07519,093
Banking system-2,896-7,185-3,389-1,10919,588
Other1,4542,61665116,184-495
Divestment proceeds72-635-45200
(In percent of GDP)
Central government3.13.12.0-6.7-8.8
Rest of general government1.02.00.00.80.9
Selected public entities0.50.7-0.4-0.5-0.4
Bank of Jamaica losses-1.8-2.00.61.2-0.1
Others and discrepancy-1,50,11.0-0.6-0.6
Overall public sector balance1.44.03.2-5.8-9.0
Financing-1.4-40-3.25.89.0
Foreign financing-0.2-0.6-1.6-1.01.2
Domestic financing-1.2-3.4-1.66.77.9
Banking system-2.5-4.7-1.8-0.58.1
Other1.31.70.37.2-0.2
Divestment proceeds0.1-0.4-0.20.00.0
Memorandum item:
GDP at current market prices116,159153,174193,416224,778242,612
Sources: Bank of Jamaica; and Ministry of Finance and Planning.
Sources: Bank of Jamaica; and Ministry of Finance and Planning.
Table 18.Jamaica: Consolidated General Government Operations 1/
1993/941994/951995/961996/97Prel.

1997/98
(In millions of Jamaica dollars)
Revenue36,46449,21061,31471,43876,203
Tax revenue28,94838,07250,26355,19158,878
Bauxite levy1,7262,3742,7952,7982,872
Other5,7918,7658,25613,44914,452
Grants4911,3431,1811,060725
Expenditure32,13443,24159,60285,43993,973
Current26,35935,74346,44966,62575,671
Capital and net lending5,7507,38713,08518,64218,115
Transfers2511268172186
Current balance10,59614,81116,0465,8721,257
Central government statistical discrepancy0-534-92S3292,275
Overall balance4,8217,8463,819-13,270-19,320
Financing-4,821-7,846-3,81913,27019,320
Net external799-2,082-3,640-4,8342,933
Net domestic-5,620-5,763-17818,10416,387
Banking system-7,066-12,685-9101,71817,445
Other1,4467,9161,18416,387-1,058
Divestment proceeds0-995-45200
(In percent of GDP)
Revenue31.432,131.731.831.4
Tax revenue24.924.926.024.624.3
Bauxite levy1.5L61.41.21.2
Other5.05.74.36.06.0
Grants0.40.90.60.50.3
Expenditure27.728.230.838.038.7
Current22.723.324.029.631.2
Capital and net lending4.9486.88.37.5
Transfers0.00.10.00.10.1
Current balance9.19.78.32.60.5
Central government statistical discrepancy0.0-0.3-0.50,10.9
Overall balance4.15.12.0-5.9-8.0
Financing-4.2-5.1-2.05.98.0
Net external0.7-1.4-1.9-2.21.2
Net domestic-4.8-3.8-0.18.16.8.
Banking system-6.1-8.3-0.50.87.2
Other1.25.20.67.3-0.4
Divestment proceeds0.0-0.6-0.20.00.0
Source: Table 12.

Includes the central government, the National Insurance Fund, the National Housing Trust, and the Human Education and Resources Training Unit.

Source: Table 12.

Includes the central government, the National Insurance Fund, the National Housing Trust, and the Human Education and Resources Training Unit.

Table 19.Jamaica: Operations of the General Government 1/
1993/941994/951995/961996/97Prel.

1997/98
I. Central Government
(In millions of Jamaica dollars)
Tota1 Receipts33,61444,59658,52463,08566,080
Revenue33,12343,25357,34362,02665,355
Tax28,94838,07250,26355,19158,878
Nontax1,5441,9303,5853,3103,097
Bauxite levy1,7262,3742,7952,7982,872
Capital revenue906877700727508
Grants4911,3431,1811,060725
Expenditure29,99739,80354,71878,05287,516
Current25,36934,45544,44264,22572,113
Capital and net lending4,6275,88211,20113,49813,128
Of which:
IMF No. 1 account003,2932,3421,009
Statistical discrepancy0-534-9253292,275
Over all balance3,6174,7933,806-14,967-21,436
Finaning-3,617-4,793-3,80614,96721,436
Net external799-2,082-3,640-4,8342,933
Net domestic-4,416-2,711-16619,80118,504
Banking System-6,116-10,741-1,0921,31217,654
Other1,7009,0241,37818,489849
Divestment Proceeds0-995-45200
(In percent of GDP)
Total receipts28,929.130.328.127.2
Revenue28.528.229.627.626.9
Tax24.924.926.024.624.3
Nontax1.31.31.91.513
Bauxite levy1.51,61.41.21.2
Capital revenue0.80,60.40.30.2
Grants0.40.90.60.50.3
Expenditures25.826.028.334.736.1
Current21.822.523.028.629.7
Capital and net lending4.03.85.86.05.4
Of which:
IMF No. 1 account0.00.01.71.00.4
Statistical discrepancy0.0-0.3-0.50.10.9
Overall balance3.13.12.0-6.7-8.8
Financing-3.1-3.1-2.06.78.8
Net external0.7-1.4-1.9-2.21.2
Net domestic-3.8-1.8-0.18.87.6
Banking system-5.3-7.0-0.60.67.3
Other1.55.90.78.20.4
Divestment proceeds0.0-0.6-0.20.00.0
II. National Insurance Fund
(In millions of Jamaica dollars)
Revenue7881,6958952,8533,065
Interest from central government30075951500
Other interest571810924843
Contributions from central government00000
Other contributions4317553801,9292,222
Expenditure3355334779421,169
Current280321409770975
Capital and net lending30100007
Transfers2511268172186
Overall balance4531,1624181,9101,896
Financing-453-1,162-418-1,910-1,896
Banking system-199-53-223-9-2
Government securities
Other-254-1,108-195-1,901-1,894
III. National Housing Trust
(In millions of Jamaica dollars)
Revenue1,9163,2741,7914,8786,016
Contributions1,1431541,7912,7244,197
From central government00000
Other01541,7912,7244,197
Interest7721,18401,6371,578
From central government00000
Other0001,6371,578
Other01,9370518240
Expenditure1,3881,7332,4655,1485,747
Current3604557534011,051
Operating expenses0004011,051
Other (including bonuses paid and taxes)00000
Capital and net lending1,0281,2781,7124,7464,696
Fixed assets532506246
Housing loans88473004,6844,650
Other91524000
Overall balance5281,541-674-270269
Financing-528-1,541674270-269
Banking system-528-1,541674471-255
Government securities00000
Other000-201-14
IV. Human Employment and Resource Training
(In millions of Jamaica dollars)
Revenue6379881,2851,6811,767
Contributions4737501,0081,2751,467
From central government0000
Other4737501,0081,2751,467
Other164238277406300
Expenditure4156381,0171,6251,815
Current3505128451,2281,532
Capital65126172398284
Overall balance22335026856-48
Financing-223-350-268-5648
Banking system-223-350-268-5648
Other00000
Sources: Bank of Jamaica; and Ministry of Finance and Planning.

Includes the central government, the National Insurance Fund the National Housing Trust, and the Human Education and Resource Training Unit.

Sources: Bank of Jamaica; and Ministry of Finance and Planning.

Includes the central government, the National Insurance Fund the National Housing Trust, and the Human Education and Resource Training Unit.

Table 20.Jamaica: Operations of Selected Public Enterprises 1/
1993/941994/951995/961996/97Prel.

1997/98
(In millions of Jamaica dollars)
Balance before transfers1,5541,957-3,878-1,498-2,143
Operating balance4,1284,8802,1364,4994,748
Capital account-2,574-2,923-6,015-5,997-6,891
Net transfer from government
capital revenue, and grants-1,006-8143,0794811,161
Overall balance5491,143-799-1,018-982
(In percent of GDP)
Balance before transfers1.31.3-2.0-0.7-0.9
Operating balance3.63.21.12.02.0
Capital account-2.2-1.9-3.1-2.7-2.8
Net transfer from government
capital revenue, and grants-0.9-0.51.60.20.5
Overall balance0.50.7-0.4-0.5-0.4
Source: Ministry of Finance and Planning.

In FY 1997/98, the selected public enterprises consisted of the Airport Authority of Jamaica, Jamaica Commodity Trading Company Limited, Jamaica Mortgage Bank, Jamaica Public Service Company, Jamaica Railways Corporation (presently defunct), National Housing Corporation, National Water Commission, Petroleum Corporation of Jamaica, Petrojam Limited, Port Authority of Jamaica, Urban Development Corporation, and the National Investment Bank of Jamaica.

Source: Ministry of Finance and Planning.

In FY 1997/98, the selected public enterprises consisted of the Airport Authority of Jamaica, Jamaica Commodity Trading Company Limited, Jamaica Mortgage Bank, Jamaica Public Service Company, Jamaica Railways Corporation (presently defunct), National Housing Corporation, National Water Commission, Petroleum Corporation of Jamaica, Petrojam Limited, Port Authority of Jamaica, Urban Development Corporation, and the National Investment Bank of Jamaica.

Table 21.Jamaica: Bank of Jamaica Operating Balance(In millions of Jamaica dollars)
1993/941994/951995/961996/97Prel.

1997/98
Income1,6883,8456,0649,9997,803
Local1,4252,9874,4298,5186,157
Local registered stock1,0722,4893,8585,7555,786
Treasury bills2001711395119
Interest current account70531462,240162
Other83274286472189
Foreign2638581,6351,4811,646
Expenses3,7246,9234,9057,2558,010
Wages and other
administrative expenses318355638464809
Current expenses142259299438292
Domestic interest2,1795,2423,0075,8816,420
Bankers66139201196268
Certificates of deposit 1/1,0561,9421,5004,6065,073
Government deposits7471,717901762622
Other3101,444405318458
Foreign Interest1,0851,067961472489
IMF578671589105163
Balance of payments support507396372367325
Auction expenses 2/00000
Foreign miscellaneous00000
Interest arrears00000
Balance-2,036-3,0781,1592,744-207
Source: Bank of Jamaica.
Source: Bank of Jamaica.
Table 22.Jamaica: Central Government Revenue 1/
1993/941994/951995/961996/97Prel.

1997/98
(In millions of Jamaica dollars)
Total revenue33,12343,25357,34362,02665,355
Tax revenue28,94838,07250,26355,19158,878
Income and profits10,89615,37718,88921,64623,297
Bauxite/alumina45030285854178
Other companies3,6875,4576,0406,1896,692
PAYE4,7166,7819,26911,90713,175
Other individuals423583579631741
Interest and dividend1,6212,2542,1442,8652,511
Property tax2574474774010
Production and consumption9,54812,32315,46917,13918,415
Excises10000
Consumption duty/special GCT1,9472,0082,0161,5152,194
Retail sales tax50000
Motor vehicle licenses340463481418237
Other licenses2653454667
Entertainment tax00000
Betting, gaming, and lottery78122198246293
Tax de sejour00000
Education tax1,0531,5412,0462,6543,120
Sales tax, used cars00000
Telephone00000
Contractors levy8199174223224
Stamp duties (local)1,4671,7162,0692,3752,108
GCT (local)4,5506,3238,4419,66210,173
International trade8,2479,92515,42816,00617,167
Custom duty3,9274,1475,9625,9786,566
Stamp duty290313361556713
Travel taxes427543713913950
Consumption duty (imports)00000
GCT Imports3,6044,9218,3928,5598,937
Bauxite levy1,7262,3742,7952,7982,872
Nontax revenue1,5441,9303,5853,3103,097
Post office601068700
Department and other 2/1,4841,8243,49800
Capital revenue906877700727508
Other51739727100
Loan repayments38948042900
(In percent of GDP)
Total revenue28.528.229.627.626.9
Tax revenue24.924.926.024.624.3
Propertytax0.20.30.20.20.0
Production and consumption8.28.08.07.67.6
International trade7.16.58.07.17.1
Bauxite levy1.51.61.41.21.2
Nontax revenue1.31.31.91.51.3
Capital revenue0.80.60.40.30.2
Source: Ministry of Finance and Planning.

Excludes grants.

Includes transfers of profits of public entities and royalties.

Source: Ministry of Finance and Planning.

Excludes grants.

Includes transfers of profits of public entities and royalties.

Table 23.Jamaica: Central Government Expenditure
1993/941994/951995/961996/97Prel.

1997/98
(In millions of Jamaica dollars)
Total Expenditure29,99740,33755,64377,72385,241
Current expenditure25,36934,45544,44264,22572,113
Goods and services12,12015,04220,96236,94547,550
Wages and Salaries10,29511,14315,80624,04328,842
Other1,8253,9005,15712,90218,708
Currernt tansfers3,3734,3975,508
Pensions4909681,222
Subsidies140
Other2,7433,4294,286
Interest payments9,87615,01517,97127,28024,564
Foreign3,9464,8015,5145,9105,645
Domestic5,93010,21412,45821,37018,918
Capital expenditure4,6275,88211,20113,49813,128
Fixed investment3,1514,00211,20113,49813,128
Foreign Institutional2,2102,7972,926
Other9411,2058,275
Of which:
IMF No. 1 account003,2932,3421,009
Net lending564705
Portfolio investment392470
Transfers520705
Past-throughs 1/
(In percent of GDP)
Total expenditure25.826328.834.635.1
Current expenditure21.822.523,028.629.7
Goods and services10.49.810.816.419.6
Wages and SalariesS.97.38.210.711.9
Other1.62.52.75.77.7
Cuirrent trransfers2.92.92.80.0
Pensions0.40.60.60.0
Subsidies0.10.00.00.0
Other2,42.22.20.0
Interest payments8.59.89.312.110.1.
Foreign3.43.12.92.62.3
Domestic5.16.76.49.57.8
Capital expenditure4.03.85.86.05.4
Fixed investment2.72.65.86.05.4
Foreign Institutional1.91.81.50.00.0
Other0.80.84.30.00.0
Of which:
IMF No. 1 account0.00.01.71.00.4
Net lending0.50.5
Portfolio investment0.30.3
Transfers0.40.5
Past-throughs l/0.00.0
Source: Ministry of Finance and Planning.

Guaranteed on-lending to the private sector.

Source: Ministry of Finance and Planning.

Guaranteed on-lending to the private sector.

Table 24.Jamaica: Central Government Financing
1993/941994/951995/961996/97Prel.

1997/98
(In millions of Jamaica dollars)
Total financing 1/-3,617-4,793-3,80614,96721,436
External financing (net)799-2,082-3,640-4,8342,933
Gross borrowing7,4146,4925,0744,52212,476
Project loans/suppliers credit1,8492,9472,6642,8342,697
Donor countries 2/1,6881,1861,3021,688163
United States0000
United Kingdom11000
Germany79285163
Netherlands4000
France0000
Italy23000
Japan0000
Other1,5711,1581,6840
Multilateral982000
IBRD 2/982000
Commercial banks236291000
Refinancing 3/236291000
New loans00000
Other2,6582,0691,10909,616
Gross other inflows5890009,616
Venezuela/Mexico oil facility00000
Other refinancing2,0692,0691,10900
Amortization-6,615-8,574-8,714-9,356-9,543
of which:
Refinancing-1,833-1,957-89700
Domestic financing (net)-4,416-2,711-16619,80118,504
Banking system (net)-6,116-10,741-1,0921,31217,654
Bank of Jamaica-4,818-12,538-1,0115,68616,577
Securities-1,3917301,7988,0839,448
Advarces-1,366-3,376-7,912-8,7337,685
Deposits (increase -)-2,062-9,8925,1036,336-556
Commercial banks-1,2981,797-82-4,3751,077
Securities3596,2373,5103,499-135
Advances26426-936-8,955-298
Deposits (increase -)-1,683-4,866-2,6551,0811,510
Domestic nonbank (net)1,7009,0241,37818,489849
Divestment proceeds0-995-45200
Sources: Bank of Jamaica; and Ministry of Finance and Planning.

Excluding Bank of Jamaica losses.

Excluding project lending.

Including government-guaranteed loans.

Sources: Bank of Jamaica; and Ministry of Finance and Planning.

Excluding Bank of Jamaica losses.

Excluding project lending.

Including government-guaranteed loans.

Table 25.Jamaica: Central Government Securities and the Bank of Jamaica Certificates of Deposits(In millions of Jamaica dollars)
MarchPrel.
19941995199619971998
Stock at end of period
Total central government domestic debt
and Bank of Jamaica certificates of deposits23,86244,76543,76874,99387,595
Central government securities20,24244,76543,76874,99387,595
Banking system14,97729,39834,85048,18458,190
Bank of Jamaica6,28112,56114,82821,71931,167
Treasury bills653149791926235
Local registered stocks5,62811,36413,90921,69330,932
Commercial banks8,69615,25517,83123,89423,461
Treasury bills2,7833,2614,4063,8003,206
Local registered stocks3,7869,09211,30913,95911,414
Other government securities5904856352,8845,887
US$20 million bonds33679179100
Other claims1,2011,6276913,2512,954
Other financial institutions2041,5822,1912,5713,562
Treasury bills119431467549364
Local registered stocks811,1281,6651,7891,957
Other government securities323532321,219
Other claims006122
Selected public enterprises1,8194,0383,6025,4466,912
Local registered stocks1,1692,6392,8313,3555,328
Treasury bills6501,2077712,0911,584
Equity investment bonds0192000
Other public sector9291,0631,0431,3381,338
Local registered stocks578708708708708
Treasury bills266355335335335
Equity investment bonds00000
US$20 million bonds8500295295
Nonfinancial private sector holdings2,31310,2664,27320,02521,155
Treasury bills5872,6759911,9234,222
Local registered stocks1,5346,8342,51516,39915,625
Holdings of equity investment bonds44400
Land bonds4341313130
Promissory notes3333333328
US$20 million bonds1123737979600
Stock of bonds in lieu of salary481643662660650
Bank of Jamaica certificates of deposit3,6210000
Commercial banks1,9750000
Other financial institutions1890000
Selected public enterprises1750000
Other public enterprises3430000
Nonfinancial private sector9390000
Source: Bank of Jamaica.
Source: Bank of Jamaica.
Table 26.Jamaica: Summary Accounts of the Banking System
March
1994199519961997Prel.

1998
(In millions of Jamaica dollars; stock at end of period)
Net foreign assets6,15315,75724,25124,46723,426
Net domestic assets43,63649,54655,70871,37080,582
Net claims on public sector9,2954,1819,4658,86839,687
Net claims on central government-3,193-9,8938062,63420,289
Net claims on selected public entities-2,267-2,578-2,078-406-1,245
Net claims on rest of public sector 1/-3,114-2,251926-2,75111,549
Operating losses of Bank of Jamaica12,33915,41714,258-2,296797
Net unclassified assets of Bank of Jamaica5,5303,485-4,44811,6878,297
Open market operations-3,144-8,331-20,045-32,269
Net credit to other
financial institutions 1/-5,041-5,570-6,0271,869-10,389
Credit to private sector23,82832,33144,23547,85741,864
Valuation adjustment21,29819,54917,60619,85919,408
Other BOJ financial assets (net)-1,617
Unclassified assets of
commercial banks3,7249,0674,22214,24024,161
Residual/float-85421,1654,2865,110
Allocation of SDRs-2,020-2,046-2,443-2,138-2,199
Medium- and long-term
foreign liabilities-7,362-4,863-4,183-3,427-3,174
Liabilities to private sector 2/49,78965,30279,95995,839104,008
Money supply (M3)36,41250,73661,20678,19982,329
Currency4,9726,5958,30310,17510,620
Demand deposits7,3308,2159,19112,63611,981
Savings deposits13,92020,69425,59934,03537,368
Time deposits4,2626,9019,63912,67011,223
Other deposits5,9298,3328,4748,68411,138
Foreign currency deposits12,27514,56618,75317,63921,679
Bank of Jamaica certificates of deposit1,1020000
(in percent change)
Net foreign assets 3/22.319,313,00,3-1.1
Net domestic assets 3/2X011.99.419.69.6
Net claims on public sector-8.3-10.38.1-0.732.2
Claims on private sector24.717.118.24.5-6,3
Other assets (net)10.65.1-14915.8-163
Liatbilities to private sector49.331.222.419.98.5
Credit to private sector52.835.736.88.2-123
Money supply (M3)32.539.320.627.85.3
Velocity (GDP/private sector liabilities)2.32.32.42.32.3
Memorandum item:
Exchange rate 4/33.133.540.035.036.0
Source: Bank of Jamaica.

In April 1997 the central bank received securities from the rest of the public sector (J$l1.2 billion) in exchange for credit that the central bank had provided to commercial banks. The rest of the public sector took over claims that the commercial banks had on other financial institutions.

Includes foreign currency deposits.

In terms of liabilities to private sector at the beginning of the year.

Accounting rate at end of period.

Source: Bank of Jamaica.

In April 1997 the central bank received securities from the rest of the public sector (J$l1.2 billion) in exchange for credit that the central bank had provided to commercial banks. The rest of the public sector took over claims that the commercial banks had on other financial institutions.

Includes foreign currency deposits.

In terms of liabilities to private sector at the beginning of the year.

Accounting rate at end of period.

Table 27.Jamaica: Summary Accounts of the Bank of Jamaica(In millions of Jamaica dollars; stock at end of period)
March
Prel.

1998
1994199519961997
Net international reserves1,85615,06419,85222,69621,423
Assets14,14326,13929,28428,55526,267
Liabilities-12,287-11,075-9,432-5,859-4,844
Net domestic assets3,458-7,699-10,407-11,587-9,536
Net claims on public sector8,2373,2934,9456,14634,136
Net claims on central government-8,508-15,932-8,611-2,92513,653
Treasury bills6537611526235
Other securities5,62811,36413,90921,98131,220
Other claims-1,886-5,262-4,843-13,576-5,891
Consolidated fund deposits-11,058-20,296-16,750-9,507-10,956
Other deposits-1,845-2,499-942-1,849-956
Net claims on selected
public entities9061,1651,1901,097-120
Net claims on rest of
public sector 1/-2,030-8422,557-1,41711,510
Operating losses12,33915,41714,258-2,296797
Net unclassified assets5,530340-4,44911,6878,297
Net credit to commercial banks-14,429-19,606-16,844-10,488-22,166
Credit to commercial banks 1/004,80611,8244,535
Liabilities to commercial banks-14,429-19,606-21,650-22,312-26,701
Bank of Jamaica certificates of deposit-1,9750000
Deposits-12,455-19,606-21,650-22,312-26,701
Net credit to other financial institutions-1,316-1,199-1,901-2,187-2,184
Valuation adjustment21,29819,54917,60619,85919,408
Open market operations and Bank of Jamaica
certificates of deposit held by private sector-1,102-3,144-8,331-20,045-32,269
Allocation of SDRs-2,020-2,046-2,443-2,138-2,199
Medium- and long-term foreign liabilities-7,209-4,546-3,438-2,734-2,646
Other BOJ financial assets (net)-1,617
Currency issue5,3147,3669,33211,11011,887
Currency outside banks4,9726,5958,30310,17510,620
Currency with banks3427711,0299351,267
Source: Bank of Jamaica.

In April 1997 the central bank received securities from the rest of the public sector (J$l1.2 billion) in exchange for credit that the central bank had provided to commercial banks.

Source: Bank of Jamaica.

In April 1997 the central bank received securities from the rest of the public sector (J$l1.2 billion) in exchange for credit that the central bank had provided to commercial banks.

Table 28.Jamaica: Summary Accounts of Commercial Banks
March
19941995199619971998
(In millions of Jamaica dollars; stock at end of period)
Net foreign assets4,2976934,3991,7712,004
Assets13,06917,04515,28915,350
Liabilities-8,771-12,646-13,519-13,346
Net claims on Bank of Jamaica 1/14,34419,64718,12314,77427,276
Claims on Bank of Jamaica14,46219,76021,90922,51027,919
Certificates of deposit1,9780000
Other deposits12,48419,75921,90922,51027,919
Liabilities to Bank of Jamaica-117-113-3,786-7,736-644
Net domesttc assets25,07338,36749,13569,11964,108
Net claims on public sector1,0588874,5202,7235,550
Net claims on central government5,3156,0399,4185,5596,636
Treasury bills2,7833,2614,4073,8003,206
Other securities4,61210,37115,12216,84317,301
Other claims1,201554691-5,363-5,660
Deposits-3,281-8,147-10,802-9,721-8,211
Net claims on selected public entities-3,173-3,743-3,267-1,502-1,125
Net claims on other public sector-1,084-1,409-1,631-1,33438
Net credit to other financial institutions 1/-3,725-4,371-4,1264,056-8,205
Credit to private sector23,82832,33144,23547,85741,864
Of which:
In foreign currency4,87011,38510,09910,9579,039
Local currency holdings3427711,0299351,267
Net unclassified assets3,7249,0674,22214,24024,161
Medium- and long-term foreign liabilities-153-318-745-693-528
Liabilities to private sector43,71558,70771,65685,66393,388
Demand deposits7,3308,2159,19112,63611,981
Savings deposits13,92020,69425,59934,03537,368
Time deposits4,2626,9019,63912,67011,223
Other deposits5,9298,3328,4748,68411,138
Foreign currency deposits12,27514,56618,75317,63921,679
(Percentage)
Memorandum item:
Loan/deposit ratio54.555.159.955.944.8
Source: Bank of Jamaica.

In April 1997 the central bank received securities from the rest of the public sector (J$l1.2 billion) in exchange for credit that the central bank had provided to commercial banks.

Source: Bank of Jamaica.

In April 1997 the central bank received securities from the rest of the public sector (J$l1.2 billion) in exchange for credit that the central bank had provided to commercial banks.

Table 29.Jamaica: Statutory Liquidity Ratios of Commercial Banks and Near-Banks(In percent)
Commercial BanksNear-Banks 1/
Required ReservesActual ReservesExcess ReserveRequired Reserves
LiquidCashLiquidCashLiquidCashLiquidCash
Assets 2/ReservesAssets 2/ReservesAssets 2/ReservesAssets 2/Reserves
(Ratios at end-March)
198738.020.043.921.05.91.0
198820.020.038.920.918.90.95.05.0
198920.020.048,120.728.10/75.05.0
199020.020.036.820.016.8--4.54.5
199133.520.039.322.25.82.26.59.0
199241.519.042.921.21.42.29.59.5
199350.025.057.925.87.90.814.014.0
199450.025.053.526.33.51.317.017.0
199550.025.060.125.910.10.917.017.0
199647.025.048.525.01.50.030.017.0
199747.025.056.725.79.70.735.017.0
199847.025.048125.01.10.035.017.0
1994
January50.025.051.927.11.92.117.017.0
February50.025.054.126.94.11.917.017.0
March50.025.053.526.33.51.317.017.0
April50.025.051.226.81.21,817.017.0
May50.025.054.825.94.80.917.017.0
June50.025.051.526.01.51.017.017.0
July50.025.053.626.63.61.617.017.0
August50.025.057.327.07.32.017.017.0
September50.025.057.926.47.91.417.017.0
October50.025.059.326.79.31.717.017.0
November50,025.059.826.69.81.617.017,0
December50.025.060.627.110.62.117.017.0
1995
January50.025.061.925.911.90.917.017.0
February50.025.061.826.011.81.017.017.0
March50.025.060.125.910.10.917.017.0
April50.025.051.925.91.90.917.017.0
May50.025.051.625.51.60.517.017.0
June47.025.052.425.55.40.517.017.0
July47.025.051.425.84.40.817.017.0
August47.025.050.725.43.70.420.017.0
September47.025.045.925.2-1.10.220.017.0
October47.025.045.425,4-1.60.420.017.0
November47.025.044.825.7-2.20.725.017.0
December47.025.044.825.4-2,20.425.017.0
1996
January47.025.050.225.63.20.625.017.0
February47.025.048.225.31.20.330.017.0
March47.025.048.525.01.50.030.017.0
April47.025.047.025.20.00.230.017.0
May47.025.048.225.41.20.435.017.0
June47.025.048.326.01.31.035.017.0
July47.025.046.325.2-0.70.235.017.0
August47.025.046.824.7-0.2-0.335.017.0
September47.025.051.124.74.10.235.017.0
October47.025.046.325.2-0.70.235.017.0
November47.025.046.125.2-0.90.235.017.0
December47.025.050.425.43.40.435.017.0
1997
January47.025.054.025.87.00.835.017.0
February47.025.054.326.67.31.635.017.0
March47.025.056.725.79.70.735.017.0
April47.025.057.425.310.40.335.017.0
May47.025.057.425.210.40.235.017.0
June47.025.054.325.27.30.235.017.0
July47.025.057.525.210.50.235.017.0
August47.025.055.325.18.30.135.017.0
September47.025.053.425.26.40.235.017.0
October47.025.049.624.82.6-0.235.017.0
November47.025.049.625.52.60.535.017.0
December47.025.050.725.13.70.135.017.0
1998
January47.025.047.524.90.5-0.135.017.0
Februaiy47.025.047.425.00.40.035.017.0
March47.025.048.125.01.10.035.017.0
Source: Bank of Jamaica, Statistical Digest.

Financial institutions regulated under the Protection of Depositor Act (PDA). This Act was replaced by the Financial Institutions Act in December 1992.

Includes cash reserves.

Source: Bank of Jamaica, Statistical Digest.

Financial institutions regulated under the Protection of Depositor Act (PDA). This Act was replaced by the Financial Institutions Act in December 1992.

Includes cash reserves.

Table 30.Jamaica: Selected Interest Rates(Percent per annum)
Commercial Bank Interest Rates
Deposit RatesJamaica
SavingsTime DepositsWeightedForeignLendingTreasuryCertificates
Deposits3–6 Months6–12 MonthsAverageCurrency 1/RateBills 2/of Deposit 3/
1990 March1818.3–2518–2522.432.425.428.5
1991 March18–2219–3020–3026.43.50–5.8837.428.530.6
1992 March15–2328.5–4628–4536.754.544350.0
1993 March15–2413–2713.5–2721.2230–5.7543.820.520.7
1994 March15–2721–5320–503932.15–6.7566.940,050.0
1995 March15–2514.5–2413–2123.04,00–7,5048.820.6
1996 March15–2219–4318–4426.14.00–7.50583343
1997 March103–198–17.58–16.515.53.75–6.8847.916.6
1998 March10.3–1512–3011–253.75–6.8844.224.7
1996
January15–2118–4218–4129.24.00–7.5057.634.7
February15–2219–4218–4129.44.00–7.5058,034.9
March15–2219–4318–4426.14.00–7.50583343
April15–2219–4518–4625.84,00–6.8858335.8
May15–2419–4520–4625.84.00–6.8860.034.8
June15–2419–4520–4626.0400–6.8860.034.8
July15–25.819–4019–4026,24.00–6.8859333.9
August15–25.816–3814–3825.83.75–6.8859.231.9
September15–25.815–3413–3223.73.75–6.8858.530.1
October15–25.813–2712–2521.83.75–6.8855.2240
November15–25.813–3212–3121.23.75–6.8855.226.0
December15–25.813–2712–2520.83.75–6.8855.225.2
1997
January15–25.812–2612–2419.43.75–6.6853.723.1
February14–22.88–20.58–2018.13.75–6.8851.620.0
March10.3–198–17.58–16.515.53.75–6.8847.9146
April10.3–198–16,58–15.513.53.75–6.8846.115.0
May103–198–168–15.512.43.75–6.8844.915.4
June103–188–208–1912,53.75–6.8845.016.4
July10.3–188–208–1911.83.75–6.8844.916.5
August103–188–208–1811.83.75–6.8844.9163
September103–158–208–1811.83.75–6.8844.217.6
October103–158–188–2012.43.75–6.8844,222.5
November103–158–19.58–2013.23.75–6.8844.224.3
December103–158–208–2014.13.75–6.8844.224.6
1998
January103–158–308–2515.83.75–6.8844,2253
February103–1512–3011–2517.13.75–6,8844.224,7
March103–1512–3011–253.75–6.8844.224.6
Source: Bank of Jamaica, Statistical Digest.

On three- six-month deposits under US$100,000.

Average discount rate on 6-month bills.

Bank of Jamaica certificates of deposit were introduced in November 1985, and phased out in February 1995.

Source: Bank of Jamaica, Statistical Digest.

On three- six-month deposits under US$100,000.

Average discount rate on 6-month bills.

Bank of Jamaica certificates of deposit were introduced in November 1985, and phased out in February 1995.

Table 31.Jamaica: Distribution of Commercial Banks’ Loans and Advances
March
19941995199619971998
(In millions of Jamaica dollars)
Total28,52135,80548,87667,12150,274
Agriculture1,6862,1481,9912,6271,899
Mining185216282277217
Manufacturing3,3144,5776,2596,7565,058
Sugar/rum4155338851,004509
Food/drink7029231,0021,2121,043
Textiles/footwear252317368299202
Cement222397511861573
Chemicals313339451317341
Other1,4102,0693,0433,0642,391
Construction development4,5224,9747,2114,4653,641
Construction3,4444,0666,1903,6732,939
Land development/acquisition1,0789081,021792702
Financial institutions1,4401,5992,76215,1653,525
Transport2,5653,5334,2034,3793,400
Electricity, water, and gas165271327173101
Government services1,8633,3033,0855,2096,179
Distributive trade1,8252,6453,7583,9483,885
Tourism and entertainment2,5763,0153,8904,3364,380
Professional services3,6383,4995,5688,2277,239
Personal4,7446,0249,54011,56110,751
(In percent of total)
Total100.0100.0100.0100.0100.0
Agriculture5.96.04.13.93.8
Mining0.60.60.60.40.4
Manufacturing11.612.812.810.110.1
Sugar/rum1.51.51.51.51.0
Food/drink2.52.62.01.82.1
Textiles/footwear0.90.90.80.40.4
Cement0.81.11.01.31.1
Chemicals1.10.90.90.50.7
Other4.95.86.24.648
Construction development15.913.914.86.77.2
Construction12.111.412.75.55.8
Land development/acquisition3.82.52.11.21.4
Financial institutions5.04.55.722.67.0
Transport9.09.98.66.56.8
Electricity, water, and gas0.60.80.70.30.2
Government services6.59.26.37.812.3
Distributive trade6.47.47.75.97.7
Tourism and entertainment9.08.48.06.58.7
Professional services12.89.811.412.314.4
Personal16.616.819.517.221.4
Source: Bank of Jamaica, Statistical Digest.
Source: Bank of Jamaica, Statistical Digest.
Table 32.Jamaica: Summary Accounts of Nonbank Financial Intermediaries(End of period)
1993199419951996Prel.

1997
(In millions of Jamaica dollars)
I. Near-Banks 1/
Net foreign assets278-562-1,348-1,459-321
Net domestic assets5,5805,5907,8807,2505,896
Claims on public sector-595-1,282-1062,3081,683
Central government (net)559-2301,0183,1902,297
Claims on selected public enterprises (net)-752-811-603-484-170
Claims on other public enterprises (net)-401-241-521-399-444
Credit to financial institutions285-691153-1,114-1,597
Commercial banks58712387
Other-302-81466
Credit to the private sector5,8846,5407,3319,2426,606
Agricultural Credit Bank/National Development Bank related90175219651859
Other5,7946,3647,1128,5915,747
Medium-term foreign liabilities-56-24-23-23-23
Other item (net)621,048525-3,163-774
Claims on the Bank of Jamaica (net)1,0981,3651,2611,3551,215
Liabilities6,9576,3947,7947,1466,789
Saving deposits5773216212217
Time deposits4,5864,3234,5713,4993,776
Other liabilities2,3141,9983,0073,4352,796
II. Building Societies
Net domestic assets8,73711,96428,74032,96133,208
Mortgages2,8843,9189,18614,52913,120
Liquid assets3,8794,94511,5489,1215,397
Other assets1,9743,1018,0069,31114,691
Liabilities8,73711,96428,73932,96133,208
Shares7,53010,20224,31526,00326,602
Other liabilities136361
Capital and reserves1,0711,4012,025
III Credit Unions
Net domestic assets1,9132,7084,0985,8327,621
Loans to private sector1,4091,8912,8313,6524,563
Other5048171,2672,1803,058
Liabilities1,9132,7084,0985,8327,621
Shares1,6032,4013,5174,6816,271
Other liabilities3103075811,1511,350
(In millions of Jamaica dollars)
IV. Agricultural Credit Bank
Net domestic assets1,4611,6992,0362,0833,060
Loans to commercial banks494615633686671
Loans to cooperative banks212234233404503
Loans to National Investment Bank of Jamaica3
Investments in banks11111
Other7518491,1699921,885
Liabilities1,2931,6992,0862,0833,060
Capital2929292929
Government loans259384599710693
Foreign loans807853945783779
Other1984325135611,559
V. National Development Bank
Net domestic assets1,3362,3903,1384,6424,490
Loans to the private sector5901,0921,4532,6392,608
Investments in banks359477358534777
Other3878221,3271,4691,105
Liabilities1,3362,3903,1384,6424,490
Domestic loans8771,380
Foreign loans
Other liabilities
Capital6969696969
VI. Jamaica Mortgage Bank
Net domestic assets462609857945
Loans and mortgages244336296308
Other investments3350135
Deposits and bank balances180207363332
Other3464147170
Liabilities462609857945
Long-term loans125122218215
Other336487639730
VII. Jamaica Development Bank
Net domestic assets300376439526
Investments in projects15125663
Investments in banks1212
Other investments136101216191
Other148261166270
Liabilities300376439526
Government loans22223275
Loans from financial institutions50505255
Foreign loans215282266263
Other loans1822326059
Share capital46464646
Other-196-236-208-172
Source: Bank of Jamaica.

Consolidated accounts of merchant banks, trust companies, and finance companies. These institutions operate under the Financial Institutions Act which, in December 1992, replaced the Protection of Depositors Act, enacted in 1974.

Source: Bank of Jamaica.

Consolidated accounts of merchant banks, trust companies, and finance companies. These institutions operate under the Financial Institutions Act which, in December 1992, replaced the Protection of Depositors Act, enacted in 1974.

Table 33.Jamaica: Balance of Payments Summary 1/
1993/941994/951995/961996/97Prel.

1997/98
(In millions of U.S. dollars)
Current account-5618-215-166-361
Trade balance-1,130-1,047-1,489-1,573-1,706
Exports1,1021,2801,4381,3691,398
Of which:
bauxite8174727972
alumina447558651586671
Imports2,2312,3272,9262,9423,104
Services574530740741715
Of which:
tourism receipts9629721,0861,1031,140
interest payments241229220217229
Transfers499532534667630
Official capital (net) 2/-53-108-12839135
Private capital (net)245484390279173
Overall balance13639447152-53
(In percent of GDP)
Memorandum item:
Current account1.60.4-4.4-2.6-5.4
Source: Table 28.

Fiscal year.

Includes medium- and long-term as well as short-term capital inflows.

Source: Table 28.

Fiscal year.

Includes medium- and long-term as well as short-term capital inflows.

Table 34.Jamaica: Balance of Payments
Prel.

1997/98
1993/941994/951995/961996/97
(In millions of U.S. dollars)
Current account-5618-215-166-361
Exports1,1021,2801,4381,3691,398
Bauxite8174727972
Alumina447558651586671
Sugar91759512279
Bananas3945464445
CARICOM5960575645
Other366427471445437
Re-exports1842463649
Imports2,2312,3272,9262,9423,104
Fuel, bauxite818712012974
Fuel, nonbauxite257258286339282
Other bauxite8977135151112
Consumer goods490497737747941
Raw materials9431,0211,1721,0341,100
Capital goods371388477543595
Trade account-1,130-1,047-1,489-1,573-1,706
Travel903880972938957
Receipts9629721,0861,1031,140
Payments5992114165183
Interest payments-208-164-131-105-108
Receipts336589112121
Payments241229220217229
Other services-121-188-217-92-134
Receipts458501523554546
Payments579689740646680
Insurance claims025800
Transfers499532549667630
Receipts538574605758693
Of which:
Grants4022545340
Payments3842569163
Services and transfers1,0731,0621,2311,4081,345
Capital account192376262318308
(In millions of U.S. dollars)
Official capital: medium- and long-term-27-124-1372048
Inflow, new funds276172147318344
Bilateral24811120
Multilateral6403500
Other188164101306344
Of which:
Project financing11012910415395
Inflow, rescheduling1171065000
Of which:
OECD countries78693600
Outflow420402333298295
Short-term public sector borrowing (net)-261681987
Private capital (net)245484390279173
Direct investment (net)10077177139126
Other, including errors and omissions14540721314047
Overall balance13639447152-53
Changes in net international reserves-136-39447-15253
Assets-134-35350-8688
Liabilities-3-41-97-67-35
IMF (net)-7-44-97-67-35
Arrears00000
Other43000
(In percent of GDP)
Current account balance-1.60.4-4.4-2.6-5,4
Merchandise-31.8-22.6-30.6-24.4-25.7
Exports31.027.729,621.221.0
Imports62.850,360.245.646.7
Services16.211.412.811.510.8
Insurance claims0.00.01.20.00.0
Transfers14.111.511.310.39.5
Net capital movements6.910.58.04.32.6
Of which:
Public sector-0.8-2.7-2.80.30.7
Overall balance3.88.51.02.4-0.8
memorandum item:
GDP (in millions U.S. dollars)3,5514,6284,8636,4526,647
Source: Bank of Jamaica.
Source: Bank of Jamaica.
Table 35.Jamaica: Exports, f.o.b.
Prel.

1997/98
1993/941994/951995/961996/97
(In millions of U.S. dollars)
Total1,1021,2801,4381,3691,397
Of which:
Re-exports1842463749
Agricultural products7472868985
Bananas3945464444
Pimento34433
Cocoa54543
Coffee2018273331
Citrus41554
Tobacco200
Ginger100
Minerals528632722665743
Bauxite8174727972
Alumina447558651586671
Manufactures375492380389334
Sugar91759512281
Rum2123222626
Liqueurs and cordials530
Fruit preparations350
Cugars and cheroots670
Clothing160261264241224
Mineral fuels and lubricants664
Other manufactures821130
Other12485249226236
(In percent of total exports)
Total100.0100.0100.0100.0100.0
Bauxite/alumina47.949.350.248.653.2
Sugar8.35.86.68.95.8
Bananas3.63.53.23.23.3
Nontraditional38.638.036.736.634.2
CARICOM5.44.74.04.14.2
Other33.233.332.832.530.0
Re-exports1.73.33.22.73.5
Source: Statistical Institute of Jamaica.
Source: Statistical Institute of Jamaica.
Table 36.Jamaica: Value, Volume, and Unit Price of Principal Exports 1/(Value in millions of U.S. dollars; volume in thousands of metric tons)
Prel.

1997/98
1993/941994/951995/961996/97
Bauxite
Value81.073.671.978.771.7
Volume3,826.43,607.33,592.93,935.03,586.9
Unit price21.220.420.020.020.0
Alumina
Value446.8558.1650.5585.9671.0
Volume3,024.63,118.63,142.63,138.83,481.6
Unit price147.7179.0207.0186.7192.7
Sugar
Value91.374.894.5122.078.9
Volume156.2122.9145.5202.4139.7
Unit price584.5608.6649.6427.9564.8
Bananas
Value39.045.046.344.344.8
Volume73.575.984.786.174.3
Unit price530.6592.9546.6518.0602.6
Source: Statistical Institute of Jamaica.

Value may not be equal to volume multiplied by price because of rounding.

Source: Statistical Institute of Jamaica.

Value may not be equal to volume multiplied by price because of rounding.

Table 37.Jamaica: Summary Bauxite Sector Operations 1/(In millions of U.S. dollars)
Prel.

1997/98
1993/941994/951995/961996/97
Total export value463548617570655
Total production cost527485558615661
Production levy 2/5269906872
Royalties 2/44355
Local production costs 2/128143172193224
Foreign production costs343269293349366
Wages and salaries43334
Fuel119102115125122
Depreciation5151474848
Interest56555
Other goods and services165107122168187
Imputed profits 3/-646359-45-12
Memorandum items:
Export value
Bauxite8174727973
Alumina382474545491582
Sources: Bank of Jamaica; and Statistical Institute of Jamaica.

Does not include operations at the Clarendon Alumina Plant (CAP) by the Government of Jamaica under a leasing arrangement that began in 1985/86. Figures based on companies’ income statements differ from balance of payments data.

The sum of production levy, royalties, and local production costs represents the net foreign exchange earnings arising directly from domestic production.

Total export value less production costs (including levy and royalties) equals imputed profits.

Sources: Bank of Jamaica; and Statistical Institute of Jamaica.

Does not include operations at the Clarendon Alumina Plant (CAP) by the Government of Jamaica under a leasing arrangement that began in 1985/86. Figures based on companies’ income statements differ from balance of payments data.

The sum of production levy, royalties, and local production costs represents the net foreign exchange earnings arising directly from domestic production.

Total export value less production costs (including levy and royalties) equals imputed profits.

Table 38.Jamaica: Imports, c.i.f.
Prel.

1997/98
1993/941994/951995/961996/97
(In millions of U.S. dollars)
Total2,2312,3272,9262,9423,104
End-use classification
Consumer goods491489738748951
Foods136143200221288
Nondurables134159235230290
Durables221186303297373
Fuels338345406467356
Raw materials1,0111,0971,2811,1501,175
Capital goods391397502577621
Construction material100103148131174
Transport equipment1239290171188
Other machinery168202263275259
Bauxite/nonbauxite
Bauxite sector170164255280186
Fuel818712012974
Other8977135151112
Nonbauxite sector2,0612,1632,6722,6632,918
Fuel257258286339282
Other1,8041,9062,3862,3242,636
(In percent of total)
End-use classification
Consumer goods22.021.025.225.430.6
Foods6.16.26.87.59.3
Nondurables6.06.88.07.89.3
Durables9.98.010,410,112.0
Fuels15.214.813.915.911.5
Raw materials45.347.143.839.137.9
Capital goods17.517.117.219.620.0
Construction material4.54.45.14.55.6
Transport equipment5.53.93.15.86.1
Other machineiy7.58.79.09.38.3
Bauxite/nonbauxite
Bauxite sector7.67.08.79.56.1
Fuel3.63.84.14.42.5
Other4.03.34.65.13.6
Nonbauxite sector92.493.091.390,593.9
Fuel11.511.19.811.59.3
Other80.881.981.579.084.6
Source: Statistical Institute of Jamaica.
Source: Statistical Institute of Jamaica.
Table 39.Jamaica: Foreign Trade Indices(Index 1982/83 = 100)
Export IndicesImport IndicesTerms

of Trade
ValueVolume 1/Unit Value 2/ValueVolume 1/Unit Value 2/
1983/8499.6112.688.589.490.399.089.3
1984/8588.896.592.087.881.7107.585.6
1985/8674.396.077.474.367.9109.470.7
1986/8783.4101.981.874.077.295.985.4
1987/88109.2109.599.793.086.8107.193.1
1988/89109.399.3110.1114.5104,7109.4100.6
1989/90146,4138.0106.1131.6116.2113.393.7
1990/91157.2142.3110.5136.6113.2120.791.5
1991/92147.8145.8101.4125.1108.6115.288.0
1992/93143.6148.596.7131.6115.2114.284.6
1993/94150.5165.491.0160.3146.6109.383.2
1994/95174.8174.6100.1167.2143.6116.486.0
1995/96196.4181.0108.5210.2168.3124.986.9
1996/97 (Prel.)184.8184.999.9210.2160.0131.476.1
Sources: Bank of Jamaica; and Fund staff estimates.

Excluding re-exports.

Sources: Bank of Jamaica; and Fund staff estimates.

Excluding re-exports.

Table 40.Jamaica: Direction of Trade
19931994199519961997
(In millions of US. dollars)
Total exports, f.o.b.1,0751,2201,4301,3871,388
Canada107148154164195
CARICOM6058605548
Guyana67765
Trinidad and Tobago2221211715
Other3230323228
EEC274286411427424
United Kingdom148164192184186
Other126122219243238
Norway971021099184
Japan1916273231
United States419440522511462
Venezuela00000
Other99170146107144
Total imports, c.i.f. 1/2,1892,2332,8322,9163,107
Canada89831008894
CARICOM115149255289325
Guyana867722
Trinidad and Tobago80121218243253
Other2722303950
EEC286197304326398
United Kingdom9596115116116
Other191101189210282
Netherlands Antilles 2/502919914
Japan182133185164215
United States1,0931,1451,4291,5141,482
Venezuela9170576667
Other283427483460512
(In percent of total)
Exports100.0100.0100.0100.0100.0
Canada10.012.110.811.814.0
CARICOM5.64.84.24.03.5
Guyana0.60.60.50.40.4
Trinidad and Tobago2.01.71.51.21.1
Other3.02.52.22.32.0
EEC25.523.428.730.830.5
United Kingdom13.813.413.413.313.4
Other11.710.015.317.517.1
Norway9.08.47.66.66.1
Japan1.81.31.92.32.2
United States39.036.136.536.833.3
Venezuela0.00.00.00.00.0
Other9.213.910.37.710.4
Imports100.0100.0100.0100.0100.0
Canada4.13.73.53.03.0
CARICOM5.36.79.09.910.5
Guyana0.40.30.20.20.7
Trinidad and Tobago3.75.47.78.38.1
Other1.21.01.11.31.6
EEC13.18.810.711.212.8
United Kingdom4.34.34.14.03.7
Other8.74.56.77.29.1
Netherlands Antilles 2/2.31.30.70.30.5
Japan8.36.06.55.66.9
United States49.951.350.551.947.7
Venezuela4.23.12.0232.2
Other12.919.117.115.8163
Source: Statistical Institute of Jamaica.

Higher than balance of payments data due to inclusion of payments for freight and insurance.

Predominantly imports of Mexican oil refined in Curacao.

Source: Statistical Institute of Jamaica.

Higher than balance of payments data due to inclusion of payments for freight and insurance.

Predominantly imports of Mexican oil refined in Curacao.

Table 41.Jamaica: Selected Tourism Data
Prel.

1997/98
1993/941994/951995/961996/97
Total number of visitors
(in thousands)1,648.71,540.81,666.61,751.11,779.2
Stopovers998.7973.01,044.11,056.11,088.3
Long stay 1/960.6931.0
Short stay 1/38.142.0
Cruise-ship passengers and armed forces650.0567.8622.6695.0690.9
Non-resident Jamaicans126.0120.0127.0109.5101.7
Average length of stay for
Stopovers visitors (in days)10.910.610.711.010.7
Total visitor days (in thousands)11,535.810,881.611,794.212,312.512,335.7
Stopovers10,885.810,313.811,171.611,617.611,644.8
Cruise-ship passengers and armed forces650.0567.8622.6695.0690.9
Total expenditure in millions of U.S. dollars962.0971.71,085.61,103.01,139.5
Average daily expenditure (in U.S. dollars)
Stopovers8585878591
Cruise passengers5880828684
Sources: Ministry of Tourism; and Fund staff estimates.

Long stay refers to three days or more; short stay refers to less than three days.

Sources: Ministry of Tourism; and Fund staff estimates.

Long stay refers to three days or more; short stay refers to less than three days.

Table 42.Jamaica: Capital Account of the Balance of Payments(In millions of U.S. dollars)
Prel.

1997/98
1993/941994/951995/961996/97
Capital balance192376262318308
Official capital inflows, new funds276172147318344
Bilateral balance of payments support24811120
United States (excluding Eximbank)15711120
Canada40000
United Kingdom00000
Japan00000
Germany40000
France00000
Italy10000
Other00000
Multilateral balance of payments support6403500
World Bank4003500
IDB200000
Others40000
Government project financing7065748080
Government guaranteed project
financing4064307315
Other783514153243
Venezuela/Mexico oil facility2501400
Bauxite--Alcan00000
Bauxite--Marc Rich00000
Car credit00000
Other54350153243
Official capital inflows (rescheduling)1171065000
Venezuela30281400
Commercial banks99000
OECD countries78693600
Official capital outflow-420-402-333-298-295
Short-term public sector borrowing (net)-261681987
Private capital.246484389279173
Direct investment (net)10077177139126
Other, including errors and omissions14640721314047
Memorandum items:
Current account-5618-215-166-361
Overall balance13739447152-53
Source: Bank of Jamaica.
Source: Bank of Jamaica.
Table 43.Jamaica: Net Official International Reserves(In millions of U.S. dollars, end period)
Prel.

1997/98
1993/941994/951995/961996/97
Net reserves56450496649595
Gross reserves429783732818730
Holdings of SDRs811300
Other assets421772729818730
Liabilities-373-333-236-170-135
IMF-356-313-216-147-112
Norway Consultancy Fund00000
Libya00000
Iraq-17-20-20-23-23
CARICOM bilateral clearing facility00000
Marubeni00000
Short-term liability00000
Arrears00000
memorandum items:
Change in net reserves 1/-137-394-47-15253
Gross official reserves

(in weeks of nonbauxite imports)
1017131412
Source: Bank of Jamaica.

Change from the same date a year ago. A minus sign indicates increase in net reserves.

Source: Bank of Jamaica.

Change from the same date a year ago. A minus sign indicates increase in net reserves.

Table 44.Jamaica: Medium- and Long-term External Public Debt Outstanding(In millions of U.S. dollars end of period)
Prel.

1997/98
1993/941994/951995/961996/97
Total3,6543,6783,4233,1813,173
Official creditors3,1363,2643,0352,7902,590
Bilateral1,8091,9001,8131,7131,461
OECD1,5691,6921,6311,5381,316
Non-OECD241208182175145
Multilateral1,3271,3651,2221,0771,129
IBRD463400386283396
IMF339328214146106
Others525637622648627
Private creditors518414388391583
Commercial bank394308297281283
Other123106916250
Bond Issue00048250
Memorandum items:
Total debt, percent of exports of

goods and nonfactor services
147.8133,5106.7106.2103.5
Total debt, percent of GDP104.280.371.550,148.3
IMF debt, percent of GDP9.67.14.42.31.6
Source: Bank of Jamaica, External Debt Management Department.
Source: Bank of Jamaica, External Debt Management Department.
Table 45.Jamaica: External Public Debt Service
Prel.

1997/98
1993/941994/951995/961996/97
(In millions of U.S. dollars)
Debt service payments
(before rescheduling) 1/701698623545507
Interest 2/213205193188183
Total, excluding IMF191185177177174
IMF212016119
Amortization 3/488493430357324
Total excluding IMF420402333298295
IMF6891965928
Debt service payments
after rescheduling)584592573545507
Average interest rate on public debt5.95.65.45.65.8
(In percent of exports of goods and nonfactor services)
Debt service (before rescheduling)28.425.419.418.216.5
Debt service (after rescheduling)23.621.517.818.216.5
Debt relief4.73.91.60.00.0
IMF payments3.64.03.62.30.9
Interest payments (accrual basis)8.67.56.26.15.9
Sources: Bank of Jamaica; and Ministry of Finance and Planning.

Based on scheduled payments; includes changes in Bank of Jamaica reserve liabilities (other than those to the Fund).

Includes interest payments on short-term public sector debt.

Includes amortization of a 1982 advance out of bauxite levy receipts.

Sources: Bank of Jamaica; and Ministry of Finance and Planning.

Based on scheduled payments; includes changes in Bank of Jamaica reserve liabilities (other than those to the Fund).

Includes interest payments on short-term public sector debt.

Includes amortization of a 1982 advance out of bauxite levy receipts.

Table 46.Jamaica: Exchange Rates(Period averages)
Official

Market 1/
Nominal

Effective

Exchange Rate

Index 2/
Real

Effective

Exchange Rate

Index 2/
19801.781248.9151.5
19811.781266.4161.4
19821.781283.1167.4
19832.018258.8158.1
19844,055153.1110:5
19855.554113,296.6
19865.476110.4103.9
19875.487109.1102.6
19885.4901103104.6
19895.763115.1112.1
19907.291100.0100.0
199112.71670.090.3
199222.96936.978.1
199324.95139.788,0
199433.19033.986.0
199535.29331.991.5
199637.12030.8108.9
199735,40433.3125.9
1995
January33.14034.291.6
February33.09034.091.6
March32.25333,691.3
April33.45233.190.8
May33.66532.991.5
June33.73832.892.4
July34.11832.692.8
August35.44332.293.5
September36.79231.192.4
October38.65629.589.7
November39.55128.388.4
December39.61628.492.0
1996
January39.63128.6944
February39.78628.596.8
March39.84528.598.3
April39,80928.6100,1
May38.13529.2103.1
June35.38030.9110.3
July35,49332.01142
August34.82132.4116.6
September34.92432.7118.4
October34.90932.7118.4
November34.95532.5117.8
December34.86532.7118.8
1997
January34.62233.2120.9
February34.95233.4122.1
March34.98433.5122.9
April35.38333.6124.2
May35.28333.3123.9
June35.24933.2124.8
July35.37333.3126.2
August35.47633.7129.2
September35.95333.2128.1
October35.95232.9128.1
November36.16432.8128.4
December36.34133.2131.1
Source: IMF, Information Notice System.

Monthly data are for the end of the month; Jamaica dollar per U.S. dollar.

1990 = 100; increase in index represents appreciation of Jamaica dollar.

Source: IMF, Information Notice System.

Monthly data are for the end of the month; Jamaica dollar per U.S. dollar.

1990 = 100; increase in index represents appreciation of Jamaica dollar.

Appendix I: List of Primary Dealers as of February 1998
1.Alpha Financial Services Limited
2.Barita Investment Limited
3.CIBC Trust and Merchant Bank Jamaica Limited1
4.Capital and Credit Merchant Bank2
5.Citimerchant Bank Limited1
6.Citizens Bank Limited1
7.Dehring, Bunting and Golding Limited1
8.Edward Gayle and Company Limited1
9.Horizon Merchant Bank Limited2
10.Jamaica Money Market Brokers Limited1
11.Mayberry Investments Limited1
12.Pan Caribbean Merchant Bank Limited2
13.Scotiabank Jamaica Trust and Merchant Bank Limited2

Banks or affiliated companies.

Near banks or affiliated companies.

Banks or affiliated companies.

Near banks or affiliated companies.

Appendix II: Jamaica: Summary of Privatizations, 1981–97
EntityDale of

privatization
Method of salePayment in

millions of

Jamaican

dollars
Payment in

millions of

U.S. dollars
Sector
I Enterprises
Versair Inflight Ltd.1981Sale of shares1.50Tourism
Southern Processors1981Sale of assets1.57Agro-processing
Rural Ice and Cold Storage1986Sale of assets0.50Manufacturing-ice
Hanover Spices Ltd,1986Sale of assets0.11Agro-processing
Jamaica Oxygen and Acetylene Ltd.1986Sale of shares2.00Manufacturing-industrial gases
Hellshire Fish Farms1986Sale of assets0.88Agro-processing
Zero Processing and Cold Storage1986Sale of assets3.99Food processing-cold storage
National Commercial Bank1986Sale of shares156.0Finance
National Hotel Supplies Ltd.1987Sale of assets6.00Tourism
Caribbean Cement Co. Ltd.1987Sale of shares142.65Manufacturing
Royal Caribbean Hotel1987Sale23.00Tourism
Telecommunications of Jamaica Ltd1987–1990Sale of shares108.74129.86Communications
Martins Travel Service Ltd.1987Sale of sharesTourism
Serge Island Dairies Ltd.1988Sale of shares1.78Agro-processing
West Indies Pulp and Paper Ltd.1989Sale of sharesManufacturing
Jamaica Gypsum and Quarries Ltd.1989Sale of shares4.004.00Manufacturing
Casa Monte Hotel1989Sale of assets5.00Tourism
Casa Montego Hotel1989Sale of assets22.40Tourism
Inn-on-the Beach Hotel1989Sale of assets7.00Tourism
Wyndham Rose Hall Hotel1989Sale of assets25.1218.00Tourism
Jamaica Jamaica Hotel1989Sale of assets44, 968.00Tourism
Eden II/Sandals Dunn River1989Sale of assets27.705.00Tourism
Hedonism II Hotel1989Sale of assets63.2110.75Tourism
Trelawny Beach Hotel1989Sale of assets29.935.10Tourism
Montego Inn Hotel1989Sale of assets2.70Tourism
Jack Tar Hotel1990Sale of assets24.153.50Tourism
Wyndham New Kingston Hotel1990Sale of assets14.876.38Tourism
Mallards/Americana Hotel1991Sale of assets17.00Tourism
Jamaica Frozen Foods Ltd.1991Sale of assets8.00Food processing-cold storage
Jamaica Fisheries Complex Ltd.1991Sale of assets0.48Food processing-cold storage
West Indies Glass Ltd.1991Sale of shares40.00Manufacturing
Agricultural Mechanical Services1991Sale of assets2.00Agri-mechanical
Negril Cabines1991Sale of assets15.00Tourism
RJR“B” Shares1991Sale of shares15.70Communications
Montpelier/Shettlewood Properties1992Sale of land18.00Agricultural
National Commercial Banks1992Sale of shares526.00Finance
Jamaica Drip Irrigation Ltd.1992Sale of shares0.60Agricultural
Governmenting Printing Office1992ESOPPrinting services
Caribbean Steel Co. Ltd.1992Sale of shares163.35Manufacturing
Caribbean Cement Co. Ltd.1992Sale of shares168.00Manufacturing
Cornwall Dairy Development Ltd.1993Sale of assets9.49Agri-processing
Jamaica Soya Products Industries Ltd.1993Sale of shares49.50Agro-processing
National Computer Centre1993ESOPComputer services
National Cassava Centre1993Sale of assets3.20Agro-processing
CMP Shares1993Sale of shares1.25Manufacturing
Skyline Hotel1993Sale of assets100.00Tourism
Sugar Estates:1993Sale of factory1,360.00Agro-processing
FromeEquipment and cane
MonymuskLands; lease of
Long Pondcane lands
Bernard Lodge
Victoria and Eastern Banana1994Sale of shares330.00Agricultural
Holiday Inn-Montego Bay Hotel1994Sale of assets21.00Tourism
Air Jamaica Ltd.1994Sale of assets/sharesTransportation
Police Garage1994Management servicesTransportation
Water Valley Estate1994Sale of land14.00Agricultural
Ashtrom Building Systems Ltd.1995Capital reorganizationConstruction-housing
Insswood Vinegar1995Sale of shares3.30Agro-processing
Trans-Jamaican Airline Ltd.1995Sale of sharesTransportation
Highgate Foods1996Sale of shares7.03Agro-processing
Spring Plains-Packing Line1996Sale of assets0.10Agricultural
Digital Computer Systems Ltd.1996Liquidation0.25Computer services
NIBBI Tractors1996Sale of assets2.48Agri-mechanical
Jamaica Grain and Cereal Ltd.1996Sale of shares12.00Agro-processing
Long pond Poultry Assets1997Sale of buildings4.50Agro-processing
Jamaica Broadcasting Company1997Sale of assets70.0Communication
II. Land Settlements
Privatization of land1989/94Sale of land156.4
Total3,834.18228.69
Source: Ministry of Finance; NIBJ, 1997.
Source: Ministry of Finance; NIBJ, 1997.
Appendix III: Jamaica: Summary of Tax System as of March 31,1998
TaxNature of TaxExemptions and DeductionsRates
1. Tax on net income and profits
1.1 Taxes on companies corporations and enterprisesAnnual tax on resident company income, which accrued in or was derived from Jamaica or elsewhere irrespective of whether the income is remitted to Jamaica. For nonresident companies, on income which accrued in or was derived from Jamaica. The year of assessment is the period from January 1 to December 31 in each year.Exemptions: charitable, religious, scientific, and educational organizations are exempt under the Income Tax Act Other enterprises are under the Industrial Incentives Act, the Hotel Incentives Act, the Shipping Incentives Act, the Motion Picture Industry Encouragement Act, the Jamaica Export Free Zone Act, the Foreign sales Corporations Act, the Income Act in respect of prescribed agricultural activity the Cooperative Societies Act, and the Resort Cottages Act1) Company Profit Tax: 33.3 percent; building society 30 percent; life assurance company 75 percent
The Income Tax Act 1954, as amended up to 1955).
2) Distributions: Withholding tax (resident shareholder), 33.3 percent On nonresident shareholder, appropriate Jamaican or treaty rate. Withholding tax on specified distributions to resident shareholders (other that capital dividends), security holders, and principal members (loans, residence), 33.3 percent.
Bauxite mining income assessed on assumed net profit per ton of bauxite. To avoid the transfer pricing problem, profits are calculated on a transparent set of price indicators.
For example: approved enterprises may be granted a tax holiday of up to ten years depending on loca! value-added content
Income from qualifying activities in the Export Free Zone is exempt from tax indefinitely.
Income derived from hotels may be exempt up to 15 years.3) Premium Income:

a) Regionalized insurance companies—

15 percent of premium income;

b) Others - 2 percent of premium

income.
Deductions:
1) Expenses wholly and exclusively incurred by corporation in

earning income in the year of assessment are fully deductible.
2) Bad debts are deductible in the year of assessment in which

they become bad.
3) Losses are deductible in the year of assessment and can be

carried forward indefinitely until set off in full. There is no loss

carry back.
4) For industrial and provident societies any payment to

members on account of their transactions is tax deductible For

building societies share interest and profits allocated to

general reserves up to 5 percent of assets are deductible

items
5) National insurance contribution: employers-paid

contributions are deductible.
Tax Credit:

From 1994 tax credit is given on issue of bonus shares of

nominal value not exceeding 50 percent of after tax profits.
25 percent of nominal value of shares

issued.
Capital allowances: wear and tear for the write-off of fixed assets are permitted as below:
(1) Industrial buildings:
Initial allowance:20 percent
Declining balance:Rate approved by Commissioner
(2) Nonresidential buildings: annual allowance (only)

prescribed rates Basis: straight line or (fixed line) unless the

allowance is being claimed under Section 13 (N).
2.5 or 5 percent
Initial allowance:
Annual allowance:
(a) Reducing balance
(b) Straight-line according to the formula:
5/4 x 9/10 x________1________)Rate as calculated using the

straight-line formula.
anticipated normal
working life
(3) Motor Vehicles.
(a) Trade vehicles:

annual allowance, (straight-line):
12.5 percent.
(b) Private vehicles:12.5 percent
(annual allowance in respect of private vehicles is limited to a yearly maximum per vehicle of J$400 and an aggregate maximum of J$3,200); annual allowance, (straight-line).
(4) Basic industry. Manufacturing (including canning and preserving), construction, electricity, store warehouses, cold storage, and docks. Investment allowance (in lieu of any initial allowance but not applicable in determining unallowed residue).20 percent
Special allowance for plant or machinery used on two shifts or more per day in specified canning and preserving, agricultural processing and manufacturing industries.Not explicitly specified but not exceeding those applicable to plant and machinery.
(5) From 1994 Special Capital Allowances on new machinery.50 percent write off for each of two years.
(6) Sugar industry investment allowance. Special investment allowance: not applicable in determining unallowed residue. The 40 percent may be election be spread forward up to six years. Any portion still remaining unallowed at the end of the period above may be carried forward to another 11 years. Total period for allowing the SIA is therefore 17 years. Annual allowance:40 percent Various prescribed rates.
(7) Agricultural investment allowance on expenditure in farming. As above for sugar industry except that the total period for write-off is 11 years.As per sugar industry.
(8) Mines and oil wells:
Initial allowance:
Annual allowance:
Output of the year
Output of the year + total potential output × residue of expenditure
(9) Plant and machinery (used for mines and oil wells but treated as plant and machinery for year). Annual allowance (as for ordinary plant and machinery).Prescribed rates determined by Commissioner.
(10) Scientific research: Annual allowance.20 percent of capital expenditure and 1/4 of other relevant expenditure.



1/4 of capital expenditure annually.
(11) Patents allowance: annual.
Note: companies enjoying exempt status are not eligible for special investment allowances. Income derived by nonresidents on investment or deposits in building society, housing schemes, approved public utilities, and hotel enterprises are tax exempt.
1.2 Taxes on IndividualsA tax on “world” income accruing to or derived by residents from any trade, business, rental, profession, employment, or vocation. Nonresidents are taxed on all income accruing in or derived from Jamaica, Although there is no specific provision, capital receipts and gains are not considered income.Taxable income: all taxable income is taxed at the flat rate of 25 percent Nonresident also pay at the rate of 25 percent, or at a rate under Double Taxation Treaty.
(The Income Tax Act 1954, as amended 1992).
Residents and nonresidents enjoy the following exemptions:
Income from employment during the current fiscal year is subject to pay-as-you-earn (PAYE) assessment. As regards other sources of income, the current fiscal year also forms the base for assessment purposes.(1) Capital gains on shares, stocks, and securities (if these do not exceed one half of income from other sources.Withholding taxes
(1) Residents Interest payments, 25 percent; dividends 25 percent
(2) Dividends from approved investments, including from firms receiving tax holidays.
(2) Nonresidents 25 percent or at treaty rate.
Employment income includes estimated annual values of perquisites or other benefits provided in kind, and pensions, annuities, etc., for past services. Annual value of housing accommodation provided by the employer (maximum limit 15 percent of total emoluments) is included in chargeable income. Payments by the employer of services at the employee’s residence, for example, electricity, gas, telephone, domestic helpers, etc., are also considered perquisites and are taxable in the hands of the employee but upkeep allowances for motorcars paid to public servants are excluded.(3) Interest on government securities paid out of Consolidated Fund.
(4) Proceeds from approved pension scheme or a statutory pension scheme p to J$15,000.Exemptions from withholding tax:
(5) Lump-sum payments from public funds.(a) Interest paid to an approved overseas organization;
(6) Income from prescribed agricultural activity.(b) Interest from investment by nonresident (other than a resident in a tax treaty country) in a building society; and improved housing scheme or an approved public utility.
Income of a married woman living with her husband shall be assesses and charged to tax as if she were unmarried, but joint assessment may be elected.(7) Total income not in excess of J$100,464 w.e.f Jan. 1, 1999 or J$l45,464 for persons other than pensioners 65 years and over or J$190,464 for pensioners 65 years and over.(3) Mining companies registered in Jamaica
Interest paid overseas on mining related debt: nil.
(8) All expenses incurred wholly or exclusively in acquiring income are deducted. Contributions to National Insurance Scheme are fully deductible but limits have been placed on allowable deductions for pensions contributions (up to 10 cent of total emoluments).
(9) Payments for telephone, the employee’s residence, u