The Private Sector Organisation of Jamaica (PSOJ) strongly supports the Government of Jamaica’s decision to access the International Monetary Fund (IMF) Rapid Financing Instrument (RFI). The IMF’s RFI is available to all member countries facing an urgent balance of payments need, without having a full-fledged program in place, ongoing reviews or conditionalities.
The COVID-19 pandemic has already had a negative impact on the country and there is no doubt that Jamaica will continue to experience a sharp decline in FX earnings.
Tourism is a key economic driver and is one of Jamaica’s primary earners of foreign exchange. For FY18/19, the overall US$3.2b visitor expenditure accounted for approximately 36% of Jamaica’s foreign exchange inflows. With a halt in the industry due to the COVID-19 virus spread and an anticipated reduction in remittance (remittance inflows of US$2.7b contributed to 30% of total flows for FY18/19), the country’s FX earnings will be negatively impacted which would be offset by lower imports and reduced prices for oil.
This reduction in FX will put pressure on the country’s external accounts and consequently the Net International Reserves.
The Government’s request to access the IMF RFI should help to mitigate or cushion the impact of the open-ended nature of the pandemic and its economic spillovers which poses significant risk to Jamaica’s balance of payments which could reverse the macroeconomic stability achieved over the past 7 years.
The organisation therefore believes that requesting access to the RFI is a prudent and proactive strategy by the Government as Jamaica experiences fallout in the economy resulting from the COVID-19 pandemic.
