The Bank of Jamaica (BoJ) is reporting that at the end of June 2014, the country’s Net International Reserves (NIR) increased to US$1.37 billion up from US$1.16 billion at the end of May 2014.
The BoJ said the increase has resulted from growth in the country’s foreign assets and a decrease in its foreign liabilities.
According to the central bank, at the end of June, foreign assets increased by US$195 million and foreign liabilities, which includes money owed to the International Monetary Fund (IMF), fell by US$16.24 million.
The NIR acts as a measure of foreign goods and services that can be purchased over a period of time. It also represents a country’s ability to survive external shocks, to cope with shifts in investor confidence and natural disasters.
Speaking in an interview with JIS News, financial analyst, Ralston Hyman, said this increase is very important.
“If you have higher levels of reserves, it is easier to get credit, it is easier to get foreign direct investment (FDI) flows, because investors feel confident that they will be paid and their profits can be repatriated,” Mr. Hyman said.
He noted that before the current arrangement with the IMF, the country’s reserves fell below US$1 billion. He stated that the NIR growth is likely to continue as Jamaica receives further drawdown under the IMF programme and investor confidence in the economy improves.
Last month, during her visit to Jamaica, Managing Director of the IMF, Christine Lagarde, pointed to a recovery in the country’s reserves as an indication of positive reforms taking place under the extended fund facility with the IMF.
This was echoed by Prime Minister, the Most Hon. Portia Simpson-Miller, who said “…under the economic transformation programme…inflation is being contained and Jamaica’s international reserves are recovering.”
In the meantime, Mr. Hyman said other positive indicators such as the 16 per cent increase in FDIs last year, when compared with the previous year, is reason enough for the government to continue its strong programme of fiscal reform.
He said that the momentum will continue if the country “keeps focused on maintaining the fiscal targets, while simultaneously improving the business environment and reducing the cost of energy and bureaucracy.”
This, Mr. Hyman asserted, will lead to continuous improvements in confidence and the facilitation of more investments in the economy.
By Oroyo Eubanks