Chapter

JAMAICA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 22, 1963.
Exchange Arrangement
CurrencyThe currency of Jamaica is the Jamaica dollar.
Other legal tenderCommemorative gold coins in denominations of J$20, J$100, and J$250 are legal tender but do not circulate.
Exchange rate structureUnitary.
Classification
Managed floating with no pre-announced path for the exchange rateThe exchange rate of the Jamaica dollar is determined in the interbank market. The foreign exchange market is operated by the commercial banks, other authorized dealers (ADs), cambios, and the Bank of Jamaica (BJ). The commercial banks buy and sell for their own account. ADs and cambios are required to sell to the BJ a prescribed minimum amount of foreign exchange that they have purchased. Excess foreign exchange may be sold without restrictions to the commercial banks, other ADs, and the general public. Proceeds from official loans, divestment of government assets, and taxes on the bauxite sector payable in foreign currency are sold directly to the BJ. While there is no restriction on transactions in any currency, the principal foreign currencies accepted in the exchange market are the Canadian dollar, the pound sterling, and the U.S. dollar.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThe market is currently inactive.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments to all countries may be made by crediting Jamaica dollars to an external account or a foreign currency account. Receipts from all countries must be received by debit of an external account or in any foreign currency.
Payment arrangements
Regional arrangementsJamaica is a member of the CARICOM.
Clearing agreementsThe clearing arrangements within the framework of the CARICOM have been suspended since November 1, 1990. The BJ no longer intervenes in CARICOM private sector commercial transactions; settlements for such transactions are effected by the commercial banking sector in convertible currencies.
Administration of controlTrading in foreign exchange, except by and through an AD, is prohibited. The MOF has the authority to issue directions to specified classes of persons regarding the acquisition of foreign assets.
International security restrictions
In accordance with UN sanctionsRepayment of the loan from Iraq has been suspended in line with UN sanctions.
Payment arrearsn.a.
Controls on trade in gold (coins and/or bullion)There are no restrictions on the purchase, sale, or holding of gold for numismatic or industrial purposes.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedFunds on these accounts (“A” accounts) may be transferred freely between residents and nonresidents. In cases when the transferee is a bank, licensed deposit-taking institution, credit union, building society, cambio operator, unit trust, or pension fund, the acquisition of the foreign currency must be in accordance with directions issued by the MOF. External accounts may be credited with payments by residents of Jamaica, with transfers from other external accounts, and with the proceeds from the sale of gold or foreign currencies to an AD. They may be debited for payments to residents of Jamaica, for transfers to other external accounts, and for the purchase of foreign currencies.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyThese accounts (“B” accounts) are exempt from tax on interest earned, provided that deposits are held as certificates of deposit with at least one-year maturity. After September 22, 1991, new B accounts may not be opened.
Nonresident Accounts
Foreign exchange accounts permittedA accounts held by nonresidents are subject to the same regulations applied to those accounts held by residents, but nonresidents may open tax-free foreign currency A accounts. All credits to these accounts must originate directly from foreign remittances and not from the local purchase of foreign exchange.
Domestic currency accountsThe same regulations apply as for accounts held by residents.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetYes.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImport licenses are required for pharmaceutical products and items that endanger public health or security; otherwise, goods may be imported freely without a license. Import licenses, when required, are issued by the Trade Board, which is responsible to the Minister of Industry and Commerce. Imports of motor vehicles require a permit for government statistical purposes. Payments for imports may be made by commercial banks without reference to the BJ.
Import taxes and/or tariffsImports are subject to customs tariffs of up to 20% for nonagricultural products and 40% for agricultural products, in compliance with the CET arrangement of the CARICOM. Some agricultural imports are subject to additional stamp duties of up to 95%. Taxes are collected by customs at the port of entry. On January 1, 2000, the fourth phase of the CARICOM CET came into effect.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesMost goods may be exported without restriction. However, specific licenses are required for exports of certain agricultural products, ammunition, explosives, firearms, antique furniture, motor vehicles, mineral and metal ores, paintings, jewelry, and petroleum products.
Without quotasn.r.
With quotasn.r.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Bonds or other debt securitiesn.r.
On money market instruments
Sale or issue locally by nonresidentsThese transactions are subject to ministerial approval; a prospectus is required under the Companies Act.
Purchase abroad by residentsFor banks, licensed deposit-taking institutions, credit unions, building societies, cambio operators, unit trusts, and pension funds, the purchase must be in accordance with directions issued by the MOF.
Sale or issue abroad by residentsThe same regulations apply as for purchases.
On collective investment securitiesMinisterial approval is required for banks, licensed deposit-taking institutions, credit unions, building societies, cambio operators, unit trusts, and pension funds.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsn.r.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital movementsn.r.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsOn February 1, 1999, the cash reserve requirement of commercial banks’ domestic currency deposits was lowered to 19% from 21% and on foreign currency deposits to 19% from 20%. Effective May 1, 1999, the cash reserve requirement was equalized at 17%. Effective October 1, 1999, the cash reserve requirement was lowered to 16% from 17%. On March 1, 2000, and on June 1, 2000, this requirement was reduced to 15% and 14%, respectively.
Liquid asset requirementsEffective February 1, 1999, the domestic liquid asset requirement for commercial banks was lowered to 41% from 43% and to 39% on May 1, 1999. For nonbank financial institutions, there is a requirement of 35% for assets in foreign currency and domestic currency. Effective June 1, 2000, the commercial banks’ liquid asset requirement was lowered further to 35%, effectively unifying these requirements. Effective October 1, 1999, the liquid asset requirement was reduced to 34%. On March 1, 2000 and June 1, 2000, this requirement was lowered to 33% and 32%, respectively.
Provisions specific to institutional investorsMutual fund schemes must be approved by the Securities Commission.
Limits (min.) on portfolio invested locallyThe minimum to be specified by the Superintendent of Insurance does not exceed 70% of the domestic liabilities of the company.
Currency-matching regulations on assets/liabilities compositionCommercial banks and licensed deposit-taking institutions may be required to match their Jamaica dollar liabilities to their clients with Jamaica dollar assets.
Other controls imposed by securities lawsNonresident companies must be incorporated or registered in Jamaica or other CARICOM member states in order to obtain a license to deal in securities or give investment advice. The nonresident company must be owned, controlled, or supervised by persons who are citizens of, and are actually residents in, Jamaica or other CARICOM states as may be prescribed.
Changes During 1999
Capital transactions
Provisions specific to commercial banks and other credit institutionsFebruary 1. The cash reserve requirement of commercial banks’ domestic currency deposits was lowered to 19% from 21% and on foreign currency deposits to 19% from 20%. The domestic liquid assets requirement for commercial banks was lowered to 41% from 43%.



May 1. The cash reserve requirement on domestic and foreign currency deposits was equalized at 17%



May 1. The liquid asset requirement for foreign currency was lowered to 39% from 40%.



June 1. Commercial banks’ liquid asset requirement was reduced to 35%, effectively unifying this requirement with that applied to nonbank financial institutions.



October 1. The cash reserve requirement and the liquid assets requirement were lowered to 15% and 34%, respectively.
Changes During 2000
Imports and import paymentsJanuary 1. The fourth phase of the CARICOM CET came into effect.
Capital transactions
Provisions specific to commercial banks and other credit institutionsMarch 1. The cash reserve requirement and the liquid assets requirement were reduced to 15% and 33%, respectively.



June 1. The cash reserve requirement and the liquid assets requirement were reduced to 14% and 32%, respectively.

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