News Release
24 February 2005
JAMAICA: BALANCE OF PAYMENTS DEVELOPMENTS
October 2004 & April to October 2004/05
October 2004
Preliminary estimates of the balance of payments for October 2004 indicate a contraction in the
current account deficit to US$100.3MN, from US$103.8MN in October 2003. This improvement
reflected reductions of US$24.6MN and US$4.1MN in the deficits on the merchandise trade and
income accounts, respectively, which were partly offset by respective declines of US$23.9MN
and US$1.3MN in the surpluses on the services and current transfers accounts. Within the
financial account, net official inflows of US$173.1MN was recorded for the month, which when
taken in conjunction with net private capital inflows of US$137.0MN, was more than sufficient to
finance the deficit on the current account. In this context, there was a build up of US$210.1MN in
the net international reserves of the Bank of Jamaica.
Merchandise Trade
The fall in the merchandise trade deficit largely reflected a contraction of US$17.6MN in
payments for imports, which was supported by an increase of US$7.0MN in receipts from
exports. The reduced spending on imports was mainly attributed to a contraction of US$30.7MN
in the value of imported fuel, which was partly offset by expansions of US$12.0MN and
US$9.6MN in machinery and transport equipment and imported manufactured goods,
respectively. Higher earnings from exports were influenced primarily by a US$10.3MN expansion
in receipts from alumina, largely associated with growth of 10.1 per cent and 8.5 per cent in
export volume and price, respectively.
Services
The fall in the services balance was mainly attributed to a decline of US$18.0MN in the surplus
on the travel sub-account. Lower net receipts on the travel sub-account resulted from a
US$16.0MN contraction in visitor expenditure, associated with respective declines of 35.6 per
cent and 2.1 per cent in cruise and stop over visitor arrivals. In addition, both the average
estimated expenditure per person per day, as well as the average length of stay per stop over
visitor fell, relative to October 2003. The travel indicators for the month reflected the impact of
Hurricane Ivan on the industry.
Income
A contraction of US$2.3MN in net investment income outflows and an increase of US$1.8MN in
net compensation to employees accounted for the narrowing of the deficit on the income account
in October 2004, relative to October 2003. The contraction in net investment income outflows
reflected a reduction in Government interest payments on external debt, while the growth in
compensation to employees was associated with increased receipts by Jamaicans for work done
during their stay abroad.
Current Transfers
The surplus on the current transfers account declined by a marginal US$1.3MN in October 2004,
relative to the comparable month of 2003, which was mainly related to a decrease of US$1.2MN
in net private inflows. The contraction in net private sector inflows stemmed from a reduction of
US$4.5MN in gross private inflows, which was partially offset by a decline of US$3.3MN in gross
private outflows.
Capital & Financial Accounts
Surpluses of US$0.3MN and US$100.0MN were recorded on the capital and financial accounts,
respectively. Within the financial account, net official and private investment inflows of
US$173.1MN and US$137.0MN, respectively, along with the capital account surplus, were more
than sufficient to finance the deficit on the current account. Consequently, there was a build-up of
US$210.1MN in the net international reserves of the Bank of Jamaica.
April to October 2004
The current account recorded a deficit of US$416.0MN for the fiscal period April to October 2004,
representing an improvement of US$8.5MN, relative to the deficit in the comparable period of the
previous fiscal year. The improvement in the current account reflected a reduction of
approximately US$44.9MN in the merchandise trade deficit, as well as an expansion of
US$61.5MN in the surplus on the current transfers account. Partly offsetting these improvements
were an increase of US$68.0MN in the deficit on the income account and a contraction of
US$29.8MN in the surplus on the services account. Within the financial account, net official and
private investment inflows of US$285.1MN and US$387.3MN, respectively, were more than
sufficient to offset the deficit on the current account. Consequently, there was a build up of
US$258.0MN in the net international reserves during the review period.
Merchandise Trade
The improvement in the merchandise trade balance, relative to the comparable period of
FY2003/04, stemmed from an increase of US$71.5MN in exports, which was partly offset by
growth of US$26.6MN in imports. Increased earnings from exports primarily reflected expansions
of US$37.0MN and US$28.4MN from alumina and non-traditional exports, respectively. The
higher earnings from alumina were associated with a 13.3 per cent increase in the average price
of the ore in the review period, which occurred in the context of enhanced demand on the world
market, in particular China. The improvement in earnings from non-traditional exports reflected
robust growth from the export of non-garment items, in particular crude material, mineral fuels,
chemicals and beverage & tobacco. Increased expenditure on imports was attributed mainly to
higher spending on food and manufactured commodities, which was partially offset by contraction
in imports of fuel and machinery & transportation equipment. The fall in the value of fuel imports
occurred in spite of a 51.0 per cent increase in the price of crude oil, as measured by the West
Texas Intermediate Index (WTI), which implied a contraction in fuel import volumes for the review
period.
Services
The reduction in the surplus on the services account reflected a contraction of US$13.9 MN in net
travel receipts, as well as respective expansions of US$11.0MN and US$4.9MN in net other
services and transportation outflows. The decline in net inflows from the travel sector mainly
reflected an increase of US$25.5MN in the expenditure of Jamaicans while travelling abroad and
the effect of Hurricane Ivan on visitor arrivals in September and October 2004.
Income
The widening of the deficit on the income account during April to October 2004 was attributed to a
US$85.4MN increase in net investment outflows, influenced primarily by higher imputed profit
remittances by the direct investment companies. This was partially countered by an improvement
of US$17.4MN in net receipts from compensation of Jamaicans working overseas.
Current Transfers
The higher surplus on the current transfers account stemmed from an expansion of US$61.4MN
in net private inflows. This performance emanated mainly from an increase of US$96.2MN in
gross private inflows, which was partially offset by an increase of US$34.8MN in gross private
outflows. Respective increases of US$42.1MN and US$36.1MN in inflows through remittance
companies and building societies were largely responsible for the growth in gross inflows.
Capital & Financial Accounts
Surpluses of US$414.4MN and US$1.6MN were recorded on the financial and capital accounts,
respectively, for the review period. Within the financial account, net private and official investment
inflows of US$387.3MN and US$285.1MN, respectively, were recorded. The balance for net
official inflows reflected Government’s debt raising activities on the international capital market in
April, July and October. The surpluses on the official and private investment accounts were more
than sufficient to finance the deficit on the current account. Consequently, there was a build-up of
US$258.0MN in the net international reserves of the Bank of Jamaica. At the end of October
2004, the level of gross reserves stood at US$1850.9MN, representing 29.8 weeks of imported
goods and 20.0 weeks of imported goods and services.
The following table shows the balance of payments for October 2003, October 2004 and for the
periods April to October 2003 and April to October 2004.
BALANCE OF PAYMENTS OF JAMAICA
US$MN.
Apr-Oct
Change
AprOct
2003
-100.3
3.5
-424.5
-416.0
8.5
-179.1
0.7
-822.4
-807.4
15.0
-197.9
-173.3
24.6
-1105.5
-1060.6
44.9
Exports
110.4
117.4
7.0
822.2
893.8
71.6
Imports
308.3
290.7
-17.6
1927.7
1954.4
26.7
18.1
-5.8
-23.9
283.0
253.2
-29.8
Transportation
-15.5
-21.5
-6.0
-95.8
-100.6
-4.8
Travel
62.2
44.2
-18.0
606.9
592.9
-14.0
Other Services
-28.6
-28.5
0.1
-228.1
-239.1
-11.0
-31.0
-26.9
4.1
-281.4
-349.4
-68.0
Oct.
2003
Oct 1/
2004
1. CURRENT ACCOUNT
-103.8
A. GOODS and SERVICES
-179.8
a. GOODS BALANCE
B. SERVICES BALANCE
C. INCOME
/1
2004
Change
Compensation of employees
14.5
16.3
1.8
48.0
65.4
17.4
Investment Income
-45.5
-43.2
2.3
-329.4
-414.8
-85.4
D. CURRENT TRANSFERS
107.0
105.7
-1.3
679.3
740.8
61.5
Official
8.0
7.8
-0.2
61.1
61.1
0.0
Private
99.0
97.9
-1.1
618.2
679.7
61.5
103.8
100.3
-3.5
424.5
416.0
-8.5
-0.1
0.3
0.4
-0.4
1.6
2.0
-0.1
0.3
0.4
-0.8
1.6
2.4
Official
0.0
0.0
0.0
0.0
0.0
0.0
Private
-0.1
0.3
0.4
-0.8
1.6
2.4
0.0
0.0
0.0
0.4
0.0
-0.4
103.9
100.0
-3.9
424.9
414.4
-10.5
Other Official Investment
28.5
173.1
144.6
-59.1
285.1
344.2
Other Private Investment 2/
23.9
137.0
113.1
275.4
387.3
111.9
Reserves
51.5
-210.1
208.6
-258.0
2. CAPITAL & FINANCIAL ACCOUNT
A. Capital Account
Capital Transfers
Acq/disp. of non-produced non-fin. assets
B. FINANCIAL ACCOUNT
1/ Preliminary
2/ (incl. net errors & omissions)
Bank of Jamaica