News Release
15 November 2004
JAMAICA:BALANCE OF PAYMENTS DEVELOPMENTS
July 2004 & April to July 2004
(Preliminary)
Preliminary estimates of the Balance of Payments for July 2004 indicate a reduction in the deficit
on the current account to US$39.9MN, relative to a deficit of US$46.0MN for July 2003. The
improvement in the current account reflected an increase of US$17.2MN in the surplus on the
current transfers account. This was partly offset by increases of US$8.8MN and US$2.4MN in
the deficits on the income and merchandise trade accounts, respectively. Within the financial
account, private capital investment inflows were insufficient to finance net official investment
outflows, as well as the deficits on the current and capital accounts. In this context, there was a
draw down of US$9.4MN in the net international reserves of the Bank of Jamaica.
Merchandise Trade
The growth in the merchandise trade deficit reflected an expansion of US$9.3MN in payments for
imports (f.o.b.), which totally offset an increase of US$6.9MN in receipts from exports, relative to
July 2003. Higher spending on imports was mainly attributed to increased imports of chemicals
and manufactured commodities. The expansion in the value of exports primarily reflected an
increase of US$18.2MN in earnings from alumina, associated with growth of 21.4 per cent and
9.9 per cent in volume and price, respectively. In addition, receipts from other traditional exports
expanded by US$2.0MN for the review month.
Services
Relative to July 2003, the surplus on the services account was unchanged at US$77.5MN. There
was an increase of US$3.8MN in net receipts on the travel sub-account, as well as a reduction of
US$0.5MN in the deficit on the transportation sub-account.
These changes were, however,
totally offset by an increase in the deficit on the other services sub-account. Gross inflows to the
travel sub-account rose by US$10.0MN, influenced by increases of 11.2 per cent and 3.8 per cent
in the number of stop over visitors to the Island and the average daily expenditure per person,
respectively. The growth in visitor arrivals was driven by an increase of 11.5 per cent in foreign
national stop over visitor arrivals, relative to July 2003.
Income
An increase of US$16.7MN in net investment income outflows accounted for the widening of the
deficit on the income account in July 2004, relative to July 2003. The higher level of outflow was
influenced by an increase in the imputed profit remittances of the direct investment companies.
Current Transfers
The improvement in the current transfers account reflected net private inflows being higher by
US$17.0MN for the review month. The increase in net private sector inflows ensued from an
expansion of US$27.2MN in gross inflows, which was partially offset by growth of US$10.2MN in
gross outflows. Gross inflows through the building societies increased by US$9.8MN, while
remittance companies registered growth of US$7.9MN, relative to July 2003.
Capital & Financial Accounts
A surplus of US$40.0MN was recorded on the financial account, while the capital account
registered a deficit of US$0.1MN for the review month, relative to July 2003. Within the financial
account, net private investment inflows of US$51.2MN were insufficient to finance net official
outflows of US$20.6MN, as well as the deficits on the current and capital accounts.
Consequently, there was a draw down of US$9.4MN in the net international reserves of the Bank
of Jamaica.
April to July 2004
The current account of the balance of payments recorded a deficit of US$105.5MN for the fiscal
period April to July 2004, representing an improvement of US$119.8MN relative to the
corresponding period of 2003. This improvement reflected a contraction of US$97.3MN in the
deficit on the goods account, as well as respective increases of US$62.5MN and US$19.5MN in
net receipts from current transfers and services. An expansion of US$59.5MN in the deficit on the
income account partly countered these improvements. Within the financial account, net official
and private investment inflows were more than sufficient to offset the deficits on the current and
capital accounts. Consequently, there was a build up of US$26.0MN in the net international
reserves during the review period.
Merchandise Trade
An expansion of US$82.5MN in the value of exports, supported by a US$14.9MN decline in
imports (f.o.b.), resulted in the improvement in the merchandise trade deficit for the review period.
With the exception of free zone exports, which declined by US$6.1MN, all other categories
expanded. In particular, major traditional exports grew by US$58.4MN, principally associated
with higher exports of alumina and sugar, while non-traditional and re-exports recorded
respective increases of US$22.1MN and US$4.6MN. Growth in exports of alumina was attributed
to a 59.6 per cent increase in the price per ton of the metal, while sugar exports benefited from
movements in the US dollar vis-à-vis the Euro, as well as an expansion of 21.8 per cent in volumes during
the review period. The decline in expenditure on imports was attributed mainly to lower spending
on mineral fuels, chemicals, and machinery and transport equipment.
Services
The expansion in the surplus on the services account reflected an increase of US$21.8MN in net
travel receipts, as well as a reduction of US$9.4MN in net transportation payments. Inflows from
travel benefited from growth of 6.7 per cent in total visitor arrivals, relative to the corresponding
period in 2003, influenced by an increase of 12.5 per cent in foreign national stopover visitor
arrivals. The improvement on the transportation account was associated with higher visitor
arrivals during the review period. Partially offsetting the expansion in the surplus on the services
account was an increase of US$11.8MN in the deficit on the other services sub-account.
Income
Higher imputed profit remittance by the direct investment companies was the main factor
contributing to the increase of US$74.4MN in net investment income outflows. This was partially
countered by an improvement of US$14.9MN in net receipts from compensation of Jamaicans
working overseas.
Current Transfers
The improved surplus on the current transfers account was primarily influenced by an increase of
US$61.5MN in net private inflows. This increase stemmed from an expansion of US$100.8MN in
gross private inflows, which was partially offset by an increase in outflows of US$39.3MN.
Respective increases of US$47.6MN and US$29.9MN in inflows through commercial banks and
building societies were largely responsible for the growth in gross inflows.
Capital & Financial Accounts
A surplus of US$106.1MN was recorded on the financial account while the capital account
registered a small deficit of US$0.6MN for the review period. Within the financial account, net
official and private investment inflows of US$56.2MN and US$75.9MN were recorded. These
surpluses were more than sufficient to finance the deficits on the current and capital accounts.
Consequently, there was a build up of US$26.0MN in the net international reserves of the Bank of
Jamaica. At the end of July 2004, the level of gross reserves stood at US$1 620.9MN,
representing 17.5 weeks of imported goods and services.
The following table shows the balance of payments for July 2003, July 2004 and for the periods
April to July 2003 and April to July 2004.
BALANCE OF PAYMENTS SUMMARY
US$Mn.
1/
2/
July July
Apr-July Apr-July
2003 2004 Change 2003/04 2004/05 Change
1. CURRENT ACCOUNT
A. GOODS & SERVICES
a. GOODS BALANCE
Exports
Imports
b. SERVICES BALANCE
Transportation
Travel
Other Services
B. INCOME
Compensation of employees
Investment Income
C. CURRENT TRANSFERS
Official
Private
2. CAPITAL & FINANCIAL ACCOUNT
A. CAPITAL ACCOUNT
Capital Transfers
Official
Private
Acq/disp. of non-produced non-fin. assets
B. FINANCIAL ACCOUNT
Other Official Investment
Other Private Investment 3/
Reserves (increase = minus)
1/ Revised
2/ Preliminary
3/ Includes net errors & omissions
BANK OF JAMAICA
-46.0
-93.2
-170.6
123.3
293.9
-39.9
-95.6
-173.1
130.2
303.3
6.0
-2.4
-2.4
6.9
9.3
-225.3
-435.3
-640.3
469.3
1109.6
-105.5
-318.5
-543.0
551.8
1094.7
119.8
116.8
97.3
82.5
-14.9
77.5 77.5
-11.8 -11.3
129.7 133.5
-40.4 -44.6
0.0
0.5
3.8
-4.2
205.0
-52.3
394.9
-137.6
224.5
-42.8
416.7
-149.4
19.5
9.4
21.8
-11.8
-44.5 -53.3
7.5 15.4
-52.0 -68.7
-8.8
7.9
-16.7
-161.9
14.5
-176.4
-221.4
29.4
-250.8
-59.5
14.9
-74.4
91.7 108.9
9.6
9.8
82.1 99.1
17.2
0.2
17.0
371.9
35.7
336.2
434.4
36.7
397.7
62.5
1.0
61.5
46.0
0.0
0.0
0.0
0.0
0.0
39.9
-0.1
-0.1
0.0
-0.1
0.0
-6.0
-0.1
-0.1
0.0
-0.1
0.0
225.3
-0.1
-0.5
0.0
-0.5
0.4
105.5
-0.6
-0.6
0.0
-0.6
0.0
-119.8
-0.5
-0.1
0.0
-0.1
-0.4
46.0 40.0
-19.7 -20.6
63.2 51.2
2.5
9.4
-6.0
-0.9
-11.9
225.4
-70.5
81.1
214.8
106.1
56.2
75.9
-26.0
-119.3
126.7
-5.2