News Release
29 April 2004
JAMAICA: BALANCE OF PAYMENTS DEVELOPMENTS
September 2003
The current account of the balance of payments improved by US$91.6MN to
US$67.3MN in September 2003, relative to September 2002. The improvement
reflected a contraction of US$76.4MN in the deficit on the merchandise trade account,
as well as increases of US$12.0MN in net receipts from both services and current
transfers. Partly offsetting these changes was an expansion of US$8.8MN in the deficit
on the income sub-account. Within the financial account, net private investment inflows
were more than sufficient to finance net official investment outflows, as well as the
deficits on the current and capital accounts. In this context, there was a build up of
US$102.5MN in the net international reserves of the Bank of Jamaica during the review
month.
Merchandise Trade
The narrowing of the deficit on the merchandise trade account was attributed to a
contraction of US$44.8MN in the value of imports (f.o.b.), as well as an increase of
US$31.6MN in earnings from exports. Growth in export earnings for the month largely
resulted from an expansion of US$33.3MN in the major traditional export category, due
entirely to an increase in alumina exports. The higher value of alumina exports resulted
from an increase of 8.7 per cent in export volumes, complemented by a 6.9 per cent
increase in the price of alumina. The effect of these increases was partially offset by
reductions of US$3.5MN and US$1.4MN in receipts from non-traditional and other
traditional exports.
Respective declines of US$46.4MN, and US$3.1MN in the c.i.f. values of raw materials
and capital goods imports contributed to the overall reduction in imports. Raw material
imports reflected contractions of US$35.5MN and US$10.9MN in the value of fuel and
other raw material imports, respectively. The lower level of fuel imports reflected the
impact of mining related fuel imports, while reduced spending on transport equipment for
the public transportation system and telephone apparatus for the telecommunication
sector were primarily responsible for the decline in expenditure on capital goods during
the review month.
Services
Declines of US$4.7MN and US$3.5MN in net transportation and other service payments,
respectively, supplemented by an expansion of US$3.8MN in net receipts from the travel
sub-sector, were responsible for the increased surplus on the services account for the
review month. The reduction in net transportation payments was associated with lower
freight charges, given the lower value of imports, while the travel sub-sector benefited
from increases of 30.4 per cent and 12.9 per cent in cruise passenger and foreign
national arrivals, respectively.
Income
The increase in the deficit on the income account in September 2003 was attributable to
an expansion of US$11.2MN in net investment income outflows, which was associated
with a US$14.4MN expansion in the imputed profit remittances of direct investment
companies. This increase was partially offset by a decline of US$4.9MN in interest
payments on Government of Jamaica’s external debt.
Current Transfers
The growth in current transfers in the review month relative to September 2002 stemmed
from an increase of US$14.1MN in net private inflows, which was attributable to an
expansion of US$16.9MN in gross inflows to the private sector. This outweighed an
increase of US$2.8MN in gross private outflows. Growth of US$10.3MN in inflows
through remittance companies was mainly responsible for the expansion in private
inflows.
Capital and Financial Accounts
A deficit of US$1.4MN was recorded on the capital account, while the financial account
reflected a surplus of US$68.7MN. Within the financial account, net private investment
inflows of US$178.2MN were more than sufficient to finance net official investment
outflows of U$7.0MN, as well as the deficits on the current and capital accounts.
Consequently, there was a build-up of US$102.5MN in the net international reserves of
the Bank of Jamaica during the review month.
April to September 2002
The current account deficit improved by US$187.9MN to US$418.2MN during the period
April to September 2003, relative to the deficit recorded for the corresponding period in
2002. The improvement reflected an increase of US$94.2MN in net earnings from
services, as well as respective reductions of US$97.9MN and US$11.3MN in the deficits
on the trade and income accounts. Partly offsetting these changes was a decline of
US$15.5MN in the surplus on the current transfers sub-account. Within the financial
account, net private investment inflows of US$359.5MN, which were US$32.5MN below
the level recorded for the similar period in 2002, were insufficient to finance net
amortisation of Government’s external debt, as well as the deficits on the current and
capital accounts. In this context, there was a draw down of US$157.1MN in the net
international reserves for the review period.
Merchandise Trade
A contraction of US$58.8MN in payment for imports (f.o.b.), augmented by an increase
of US$39.1MN in export receipts, contributed to the improvement in the merchandise
trade deficit. The fall in imports reflected declines of US$60.5MN and US$39.5MN in
capital and consumer goods imports, respectively, partly offset by an expansion of
US$23.5MN in raw material imports, relative to the corresponding period in 2002.
Increased spending of US$16.5MN and US$7.0MN on fuels and other raw material
imports, respectively, were responsible for the growth in raw material imports. The
higher value of fuel imports was attributed to increased price, as the volume of fuel
imports, particularly for the mining sector, fell. Increases in imports of parts and
accessories, industrial supplies and food influenced the growth in other raw material
imports. The contraction in capital goods imports was mainly due to lower spending on
cellular telephones and buses for the public transportation system. The reduction in
consumer goods imports stemmed from lower expenditure on all its subcategories, in
particular, durable goods imports.
Major traditional and non-traditional exports increased by US$58.6MN and US$6.9MN,
respectively, during the review period, while respective declines of US$22.9MN, and
US$5.4MN were recorded in receipts from free zone and other traditional exports. With
the exception of bauxite, all the major traditional exports recorded growth during the
review quarter. In particular, the value of alumina exports grew by US$60.5MN,
reflecting increases of 15.5 per cent and 4.9 per cent in volume and price, respectively,
relative to the similar period in 2002. Contractions of US$3.2MN and US$2.9MN in
receipts from rum and coffee exports primarily accounted for the decline in othertraditional exports.
Services
The expansion in the surplus on the services account, relative to 2002, primarily
reflected an increase of US$61.7MN in net travel receipts. Total visitor arrivals for the
review period rose by 13.2 per cent, relative to the corresponding period in 2002,
influenced by increases of 6.5 per cent and 26.2 per cent in foreign national stopover
and cruise visitor arrivals, respectively. In addition to the increase in travel receipts, there
were respective reductions of US$26.9MN and US$5.6MN in payments for
“transportation” and “other services”.
Income
An estimated decline of US$26.4MN in outflows related to the activities of the direct
investment companies largely influenced the reduction in the deficit on the income
account for the review period.
Current Transfers
The contraction in net current transfers was attributed to a reduction of US$16.0MN in
net official inflows. This decline occurred in the context of significant grant inflows in the
comparable period of 2002, which were not repeated in the review period.
Capital & Financial Accounts
A deficit of US$9.1MN was recorded on the capital account for the review period, while a
surplus of US$427.3MN was registered on the financial account. Within the financial
account, net private investment inflows of US$359.5MN and net official outflows of
US$89.3MN were recorded. The net official payment, in conjunction with the deficits on
the current and capital accounts, led to a draw down of US$157.1MN in the net
international reserves of the Bank of Jamaica. At the end of September 2003, the level
of gross reserves stood at US$1117.6MN representing 19.1 weeks of imports of goods
and 12.7 weeks of imports of goods and services.
The following table shows the balance of payments for September 2002, September
2003 and for the periods April to September 2002 and April to September 2003.
BALANCE OF PAYMENTS SUMMARY (US$MN)
1/
2/
1/
2/
Sept.
Sept.
Apr-Sep
Apr-Sep
2002
2003
Change
2002
2003
Change
1. CURRENT ACCOUNT
-158.9
-67.3
91.6
-606.1
-418.2
187.9
A. GOODS and SERVICES
-221.1
-132.7
88.4
-870.8
-678.7
192.1
a. GOODS BALANCE
-211.5
-135.1
76.4
-985.7
-887.8
97.9
Exports (f.o.b.)
87.9
119.5
31.6
658.9
698.0
39.1
Imports (f.o.b.)
299.4
254.6
-44.8
1644.6
1585.8
-58.8
-9.6
2.4
12.0
114.9
209.1
94.2
Transportation
-26.6
-21.9
4.7
-133.4
-106.1
26.9
Travel
48.8
52.6
3.8
464.4
526.1
61.7
Other Services
-31.8
-28.3
3.5
-216.5
-210.9
5.6
-23.6
-32.4
-8.8
-295.7
-284.4
11.3
7.7
10.1
2.4
46.3
35.9
-10.4
-31.3
-42.5
-11.2
-342.0
-320.3
21.7
85.5
97.8
12.0
560.4
544.9
-15.5
Official
8.9
6.8
-2.1
58.5
42.5
-16.0
Private
76.9
91.0
14.1
501.9
502.4
0.5
158.9
67.3
-91.6
606.1
418.2
-187.9
A. CAPITAL ACCOUNT
-1.4
-1.4
-0.0
-8.3
-9.1
-0.8
a. Capital Transfers
-1.4
-1.4
-0.0
-8.3
-9.1
-0.8
Official
0.0
0.0
0.0
0.1
0.0
-0.1
Private
-1.4
-1.4
-0.0
-8.4
-9.1
-0.7
0.0
0.0
0.0
0.0
0.0
0.0
B. FINANCIAL ACCOUNT
160.3
68.7
-91.6
614.4
427.3
-187.1
Other official investment
-15.4
-7.0
8.4
-31.9
-89.3
-57.4
Other private investment 3/
177.4
178.2
0.8
392.0
359.5
-32.5
-1.7
-102.5
254.3
157.1
b. SERVICES BALANCE
B. INCOME
Compensation of employees
Investment Income
C. CURRENT TRANSFERS
2. CAPITAL & FINANCIAL ACCOUNT
b. Acq./disposal of non-prod. non-fin'l assets
Reserves
1/ Revised
2/ Provisional
3/ Includes errors & omissions
BANK OF JAMAICA