JN Fund Managers’ Daily Market Update -February 4, 2020

Jamaica’s Fiscal Performance Remains Strong

Jamaica’s fiscal performance remains strong and was better than anticipated based on the latest Central Government Operations tables released by the Ministry of Finance and the Public Service. The country’s fiscal surplus for the period April to December 2019 was J$24.1B higher than the projected fiscal surplus of J$1.96B. The period’s performance was largely attributable to a J$10.4B or 2.1% increase in total revenue and grants and a simultaneous decline of J$11.8B or 2.6% in expenditures (net of amortization). The main factors influencing the increase in revenues were tax revenues (up 1.9%) and non-tax revenue (up 6.0%). Expenditures, on the other hand, declined as a result of lower interest payments (down 3.6%) and capital expenditure (down 13.1%). The primary balance, which is the country’s fiscal balance net of interest obligations, recorded a surplus of J$112.7B for the nine-month period ending December 2019, which exceeded the budget by J$18.9B or 20.1%.

We believe that Jamaica’s strong fiscal performance is a result of the positive economic developments, fiscal prudence, the revenue authorities’ compliance initiatives, reduced unemployment levels and increased business and consumer confidence. Excluding any external shocks, we believe that the positive fiscal performance is likely to be maintained over the short to medium term.