News Release
30 November 2001
JAMAICA: BALANCE OF PAYMENTS DEVELOPMENTS
August 2001 & April to August 2001
For August 2001, the current account of the balance of payments recorded a deficit of US$48.9MN,
relative to the deficit of US$21.4MN recorded for August 2000. The deterioration in the review month was
attributed to higher net payments on the merchandise trade and income accounts, which outweighed
improvements on the services and current transfers accounts.
Merchandise Trade
Relative to August 2000, the deficit on the merchandise trade account worsened by US$24.1MN to
US$120.5MN. This performance reflected a US$14.4MN expansion in payments for imports, and a
decline of US$9.7MN in earnings from exports. The growth in the value of imports emanated from
respective expansions of US$17.8MN and US$8.8MN in spending on capital goods and raw materials, as
the value of consumer goods imports contracted by US$9.3MN. Higher purchases of communication
equipment and construction materials accounted for the bulk of the growth in capital goods imports, while
additional spending on other raw materials was responsible for the increase in the raw materials category.
The contraction in the value of exports was influenced mainly by a reduction of US$8.3MN in earnings
from free zone reflecting the continued decline in garment exports. In the major traditional category,
earnings from bauxite exports increased by US$4.6MN, but this was offset by reductions of US$5.1MN
and US$1.1MN in alumina and banana exports, respectively.
Services
An improvement of US$1.7MN was recorded on the services account relative to August 2000 due largely
to a narrowing of the deficit by US$9.8MN on the “other services” account. There was a reduction in net
travel receipts, influenced by a fall of 8.1 per cent in visitor arrivals for the month.
Income
For August 2001, the deficit on the income account worsened by US$20.8MN, relative to August 2000.
This deterioration was attributed to higher net investment income payments of US$23.9MN, relating to the
imputed profit remittances of the direct investment companies, as well as, an increase in official debt
payments.
Current Transfers
Net receipts from current transfers grew by US$15.7MN to US$69.6MN for August 2001, relative to the
comparable month of 2000. Inflows of US$16.1MN to the private sector accounted for the improvement.
Capital and Financial Accounts
The capital account recorded a deficit of US$1.0MN for August 2001, relative to the deficit of US$1.1MN
recorded for August 2000. In contrast, the financial account registered a surplus of US$49.9MN, an
improvement of US$27.4MN relative to August 2000.
Within the financial account, net private
investments amounting to US$142.1MN were more than sufficient to finance net official outflows of
US$19.4MN, as well as, the deficit on the current account and facilitated a build-up of US$72.8MN in the
net international reserves of the Bank of Jamaica.
For the period April to August 2001, the current account deficit expanded by US$62.5MN to
US$141.3MN, relative to the corresponding period in 2000. This out-turn reflected a widening of the
deficit on the goods and income accounts, which outweighed improvements on the services and current
transfers accounts.
Merchandise Trade
The deficit on the trade account widened by US$76.0MN, the combined effect of a US$60.2MN increase
in payments for imports and a decline of US$15.8MN in earnings from exports. Accounting for the growth
in payments for imports were increased payments of US$39.4MN, US$28.3MN and US$13.9MN on
capital goods, free zone purchases and consumer goods, respectively. The reduction in the value of
exports stemmed mainly from free zone activities as merchandise exports grew marginally by US$0.7MN
over the review period. There was growth of US$23.6MN in the value of bauxite exports, driven by the full
resumption at the Gramercy processing plant, but this was largely offset by a US$22.8MN contraction for
non-traditional exports mainly attributed to the continued downturn in the garment industry.
Services
For the period April to August 2001, the services account recorded a surplus of US$287.8MN, an
improvement of US$8.5MN relative to the comparable period of 2000. This outturn largely reflected
improvements in the travel and “other services” sub-sectors. There was a US$10.2MN contraction in
expenditure by Jamaicans traveling abroad, which offset the decline of US$2.3MN in gross travel inflows.
Income
The deficit on the income account widened by US$20.0MN for the review period, influenced mainly by
interest payments on the Government of Jamaica foreign debt.
Current Transfers
Net receipts from current transfers grew by US$25.0MN to US$358.0MN for the review period, relative to
April to August 2000. The slower growth in current transfers was influenced by reduction in official inflows,
which resulted from the non-repetition of flows associated with the issue of cellular licenses over the
same period in 2000.
Capital & Financial Accounts
For the period April to August 2001, the capital account recorded a deficit of US$6.7MN, relative to a
deficit of US$2.2MN recorded for the similar period in 2000/01. The financial account, in contrast,
registered a surplus of US$148.0MN, US$67.0MN above the surplus recorded for the period April to
August 2000/01. Within the financial account, net official inflows of US$289.5MN relating to Government
foreign borrowing, and private investment inflows of US$171.1MN, were more than sufficient to finance
the deficit on the current and capital accounts and facilitate a build-up of US$312.6MN in the net
international reserves of the Bank of Jamaica. At the end of August 2001, the Bank’s gross reserves was
US$1670.9 million, representing approximately 28.2 weeks of goods imports or 19.3 weeks of imports of
goods and services.
The following table shows the balance of payments for August 2000, August 2001 and for the fiscal
periods April to August 2000/01 and April to August 2001/02.
BALANCE OF PAYMENTS SUMMARY
(US$MN)
1/
August
2000
2/
August
2001
1/
Apr-Aug
2000/01
2/
Apr-Aug
2001/02
1. CURRENT ACCOUNT
A. GOODS and SERVICES
a. GOODS BALANCE
Exports (f.o.b.)
Imports (f.o.b.)
-21.4
-47.2
-96.4
134.5
230.9
-48.9
-69.6
-120.5
124.8
245.3
-78.8
-242.1
-521.4
665.4
1186.8
-141.3
-309.6
-597.4
649.6
1247.0
b. SERVICES BALANCE
Transportation
Travel
Other Services
49.2
-19.5
100.8
-32.1
50.9
-22.9
96.1
-22.3
279.3
-99.1
501.9
-123.5
287.8
-104.8
509.5
-116.9
B. INCOME
Compensation of employees
Investment Income
-28.1
8.1
-36.2
-48.9
11.2
-60.1
-169.7
20.7
-190.4
-189.7
31.1
-220.8
C. CURRENT TRANSFERS
Official
Private
53.9
3.8
50.1
69.6
3.4
66.2
333.0
75.6
257.4
358.0
28.1
329.9
2. CAPITAL & FINANCIAL ACCOUNT
A. CAPITAL ACCOUNT
a. Capital Transfers
Official
Private
21.4
-1.1
-1.1
0.1
-1.2
48.9
-1.0
-1.0
0.1
-1.1
78.8
-2.2
-2.2
3.9
-6.1
141.3
-6.7
-6.7
0.3
-7.0
0.0
0.0
0.0
0.0
22.5
208.2
-39.0
-146.7
0.0
49.9
-19.4
142.1
-72.8
0.0
81.0
129.7
183.2
-231.9
0.0
148.0
289.5
171.1
-312.6
0.0
b. Acq./disposal of non-prod. non-fin'l assets
B. FINANCIAL ACCOUNT
Other official investment
Other private investment 3/
Reserves
Govt. Reserves
1/ Revised
2/ Provisional
3/ Includes errors & omissions
BANK OF JAMAICA