March 2004 & FY 2003/04
March 2004
The current account of the Balance of Payments improved by US$19.5MN to a surplus of
US$12.2 million in March 2004, relative to March 2003. The improvement in the current account balance reflected expansions of US$20.3MN and US$3.9MN in the surpluses on the current transfers and services accounts, respectively, which was complemented by a fall of US$4.6MN in the deficit on the goods account. These changes were partly offset by an increase of US$9.2MN in the deficit on the income account. Within the financial account, net private and official investment inflows were recorded, which, combined with the surpluses on the current and capital accounts, led to a build up of US$94.7MN in the net international reserves of the Bank of
Jamaica.
Merchandise Trade
An expansion of US$31.4MN in the value of exports (f.o.b.) accounted for the decline in the merchandise trade deficit for the review month. This was partially offset by an increase of
US$26.8MN in the value of imports, relative to the similar period in 2003. The expansion in exports primarily reflected increased earnings from sugar and alumina. Receipts from sugar expanded by US$14.8MN, associated with an increase of 99.8 per cent in the volume exported.
The growth in alumina exports was driven by a 19.3 per cent increase in price. Higher expenditure on imports was primarily attributed to raw material imports, in particular, fuel. The value of fuel imports increased by US$20.8MN, influenced by a 9.5 per cent increase in the price of crude oil, relative to March 2003.
Services
Growth in the surplus on the services account reflected higher net receipts of US$6.8MN on the travel sub-account, which was partially offset by respective increases of US$2.0MN and
US$0.8MN in the deficits on the transportation and other services sub-accounts. Gross inflows to the travel sector benefited from a US$7.2MN increase in tourist expenditure, influenced by growth of 5.2 per cent in total stop over arrivals to the Island.

Income
The increase in the deficit on the income account stemmed primarily from an expansion of
US$11.7MN in net investment income outflows. The higher net outflows was influenced by an increase in the imputed profit remittances of the direct investment companies.
Current Transfers
Increased net inflows of US$20.1MN to the private sector were responsible for the improvement in the current transfers account in March 2004. The growth in net private sector inflows reflected an expansion in gross inflows of US$22.9MN, which was partially offset by growth of US$2.8MN in gross outflows. Building societies recorded an increase of US$9.1MN in gross inflows, while commercial banks registered growth of US$7.8MN, relative to March 2003.
Capital & Financial Accounts
A surplus of US$0.2MN was recorded on the capital account, while the financial account registered a deficit of US$12.3MN, in the review month. Within the financial account, net private and official investment inflows of US$48.1MN and US$34.2MN, respectively, were recorded.
These inflows, combined with the surpluses on the current and capital accounts, resulted in a build up of US$94.7MN in the net international reserves of the Bank of Jamaica during the review month.
Fiscal Year (FY) 2003/04
The current account deficit improved by US$646.4MN to US$513.1MN (or 6.3 per cent of GDP) for fiscal year 2003/04. This improvement reflected respective increases of US$217.1MN and
US$125.9MN in net receipts from services and current transfers, as well as contractions of
US$273.1MN and US$30.2MN in the deficits on the goods and income accounts. Within the financial account, net private and official investment inflows, combined with the surplus on the capital account, were more than enough to offset the current account deficit. In this context, there was a build up of US$228.9MN in the net international reserves during the review period.
Merchandise Trade
An expansion of US$159.2MN in the value of exports, as well as a reduction of US$113.9MN in payments for imports (f.o.b.), contributed to the improvement in the merchandise trade deficit for the review period, relative to FY 2002/03. The higher value of exports principally reflected an expansion of US$121.9MN in receipts from alumina exports, stemming from increases of 7.5 per cent and 11.4 per cent in the volume and price, respectively. Higher world demand for metal, coupled with expansions in local capacity, accounted for growth in the volume and value of alumina exports. The contraction in expenditure on imports reflected lower spending on capital goods, influenced mainly by reduced imports of transportation equipment as well as other machinery and equipment, primarily communication related devices.

Services
The expansion in the surplus on the services account principally reflected an increase of
US$135.2MN in net travel receipts. In addition, there was a reduction of US$100.2MN in net transportation payments, stemming from higher inflows of US$74.4MN and a decline of
US$25.8MN in outflows. These changes were partially offset by an increase of US$18.2MN in the deficit on the other services sub-account. Total visitor arrivals for the period grew by 10.6 per cent, relative to the corresponding period in FY2002/03, influenced by increases of 7.0 per cent and 15.9 per cent in foreign national stopovers and cruise visitor arrivals, respectively. Both stopover and cruise arrivals to the Island for FY2003/04 surpassed the record levels in
FY2000/01.
Income
Lower imputed profit remittance by the direct investment companies and a reduction in interest payments by the Central Government were the main factors contributing to the decline of
US$38.2MN in net investment income outflows. This was partially offset by a decrease of
US$7.9MN in net receipts from compensation to Jamaicans working overseas.
Current Transfers
The improved surplus on the current transfers account was influenced by growth of US$128.6MN in net private inflows. This increase stemmed from an expansion of US$197.5MN in gross inflows, which was partially offset by higher outflows of US$68.9MN. Respective increases of
US$75.0MN and US$45.7MN in inflows through remittance companies and building societies were largely responsible for the growth in gross inflows. The expansion in private remittance inflows reflected the enhanced marketing efforts of financial institutions and remittance companies, as well as the improved economic performance of the U.S.A., the main source of these inflows.
Capital & Financial Accounts
Surpluses of US$512.4MN and US$0.8MN were recorded on the financial and capital accounts, respectively, for the review period. Within the financial account, net official inflows of
US$145.5MN, which reflected Government’s successful debt raising activities on the international capital market, was recorded. In addition, net private investment inflows of US$595.7MN, partly associated with new investments in the mining, telecommunication and financial sectors, contributed to the surplus on the financial account. These surpluses were more than sufficient to finance the deficit on the current account and therefore contributed to a build up of US$228.9MN in the net international reserves of the Bank of Jamaica. At the end of March, the level of gross reserves stood at US$1 596.9MN, representing 17.2 weeks of imported goods and services.

The following table shows the balance of payments for March 2003, March 2004 and for the periods April to March 2002/03 and April to March 2003/04.
1. CURRENT ACCOUNT
A. GOODS and SERVICES
a. GOODS BALANCE
Exports
Imports
b. SERVICES BALANCE
Transportation
Travel
Other Services
C. INCOME
Compensation of employees
Investment Income
D. 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 2/
Reserves
1/ Provisional
2/ (Includes net errors & omissions)
BALANCE OF PAYMENTS OF JAMAICA
US$MN.
Mar Mar 1/ Apr-Mar Apr-Mar 1/
2003 2004 Change 2002/03 2003/04 Change
-7.4 12.2 19.5 -1159.5 -513.1 646.4
-66.2 -57.7 8.4
-132.7 -128.1 4.6
124.3 155.7 31.4
257.0 283.8 26.8
66.5 70.4
-2.9 -3.7
3.9
-0.8
-1655.6 -1165.4
-2025.8
1313.6
3339.4
370.2
-226.6
-1752.7
1472.8
3225.5
587.3
-126.4
490.2
273.1
159.2
-113.9
217.1
100.2
101.9 108.7 6.8
-32.5 -34.5 -2.0
-37.0 -46.2 -9.2
-0.1 2.4 2.5
-36.9 -48.6 -11.7
95.8 116.1 20.3
9.2 9.4 0.2
86.6 106.7 20.1
985.7
-388.9
-613.0
82.8
-695.8
1109.1
108.7
1000.4
1120.9
-407.1
-582.8
74.9
-657.6
1235.0
106.0
1129.0
135.2
-18.2
30.2
-7.9
38.2
125.9
-2.7
128.6
7.4 -12.2 -19.5 1159.5
-0.4
-0.4
0.0
0.2 0.6 -12.1
7.8 -12.3 -20.1 1171.6
-11.7 34.2 45.9 -226.5
106.2 48.1 -58.0
-86.7 -94.7
0.2
0.0
-0.4 0.2
0.0 0.0
0.6
0.0
0.6
0.0
-12.1
0.2
-12.3
0.0
796.2
601.9
0.4
0.1
0.3
0.4
512.4
145.5
595.7
-228.9
513.1
0.8
-646.4
12.9
12.5
-0.1
12.6
0.4
-659.2
372.0
-200.5