News Release
02 March 2004
JAMAICA:
BALANCE OF PAYMENTS DEVELOPMENTS
July 2003
The current account of the balance of payments recorded a deficit of US$60.7MN in
July 2003, relative to the deficit of US$83.2MN in July 2002. The improvement in the
current account deficit reflected contractions of US$15.9MN and US$0.3MN in the
deficits on the trade and income sub-accounts, as well as an increase of US$17.6MN in
net receipts from services. Partly offsetting these changes was a reduction of
US$11.3MN in the surplus on the current transfers sub-account. Within the financial
account, net private 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$2.5MN 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 reflected a contraction of
US$23.0MN in the value of imports (f.o.b.) partially countered by a reduction of
US$7.1MN in earnings from exports. All the major categories of imports recorded
declines in July 2003. A lower level of spending on motorcars was largely responsible for
the contraction of US$8.5MN in payments for consumer goods imports, while a reduction
of US$8.1MN in the value of free zone imports was attributed to the continued scaling
down of operations at the free zones. There was a decline of US$5.2MN in raw material
imports primarily reflecting reduced spending of US$7.4MN on fuels, which was partly
offset by increased purchases of US$2.1MN for other raw materials. Capital goods
imports were lower by US$5.0MN, mainly associated with reduced spending on
transport
equipment
and
the
importation
of
telephone
apparatus
for
the
telecommunication sector during the review month. The decline in export earnings
largely resulted from a reduction of US$6.2MN in exports from the free zone.
Services
An expansion of US$12.5MN in net receipts from the travel sub-sector was the main
influence on the increase in the surplus on the services account. This was supplemented
by a decline of US$5.8MN in net transportation payments and an estimated reduction of
approximately US$4.5MN in the expenditure of Jamaicans while travelling abroad. The
travel sub-sector benefited from an increase of 12.9 per cent in overall passenger
arrivals, driven by growth of 30.4 per cent in cruise passenger arrivals.
Income
The marginal reduction in the deficit on the income account in July 2003 was attributable
to a decline in net outflows of US$7.3MN, which was associated with a US$5.0MN
reduction in the income of direct investment companies, as well as lower interest
payments of US$2.6MN on Government of Jamaica external debt. This outturn was
partially offset by decreased inflows of US$5.9MN in net compensation to employees.
Current Transfers
The decline in net current transfers for the review month stemmed mainly from a
contraction of US$9.1MN in net private outflows arising from reduced inflows of
US$5.4MN and increased outflows of US$3.7MN. This decline occurred in the context
of a US$11.4MN expansion in remittances in July 2002. In addition, net official inflows
fell by US$2.2MN during the review month.
Capital and Financial Accounts
A deficit of US$1.4MN was recorded on the capital account while a surplus of
US$62.1MN was recorded on the financial account. Within the financial account, net
private investment inflows of US$79.3MN was insufficient to finance net official
investment outflows of U$19.7MN, as well as the deficits on the current and capital
accounts. Consequently, there was a draw down of US$2.5MN in the net international
reserves of the Bank of Jamaica during the review month.
April to July 2002
The current account deficit improved by US$67.7MN to US$278.5MN, in the period April
to July 2003, relative to the deficit recorded for the corresponding period in 2002. The
improvement reflected an increase of US$70.1MN in net earnings from services, as well
as respective reductions of US$15.7MN and US$4.1MN in the deficit on the income and
trade accounts. Partly offsetting these changes was a decline of US$22.2MN in the
surplus on the current transfers sub-account. Within the financial account, net private
investment inflows of US$140.6MN, which were US$22.5MN below the levels recorded
for the similar period of 2002, were insufficient to finance net amortisation of US$70.8MN
of Government’s external debt, as well as the deficit on the current and capital accounts.
In this context, there was a draw down of US$214.8MN in the net international reserves
for the review period.
Merchandise Trade
The improvement in the merchandise trade deficit stemmed from an increase of
US$6.4MN in export receipts, partly offset by growth of US$2.3MN in payments for
imports (f.o.b.). Major traditional exports and non-traditional exports increased by
US$26.0MN and US$1.8MN during the review period, respectively, while declines of
US$16.5MN, and US$4.9MN were recorded in receipts for free zone and other
traditional exports, respectively. 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$17.3MN, reflecting increases of 4.5 per cent and 3.9 per cent in
volume and price, respectively, relative to the similar period in 2002. Contractions of
US$3.8MN and US$1.2MN in receipts from rum and coffee exports primarily accounted
for the decline in other-traditional exports.
The marginal growth in imports reflected an expansion of US$71.8MN in raw material
imports, offset by declines of US$42.7MN, US$32.0MN and US$0.9MN in capital,
consumer and free zone imports, respectively, relative to the corresponding period in
2002. Increased spending of US$41.3MN and US$30.5MN on both fuels and other raw
material imports, respectively, was responsible for the growth in raw material imports.
Higher fuel imports were attributed to increased volume and price, while parts and
accessories, industrial supplies and food influenced the growth in other raw material
imports. The contraction in capital goods imports was mainly attributable to declines in
“other machinery” resulting from lower spending on cellular telephones and “transport
and equipment” due to the non-repetition of the purchase of buses for the public
transportation system in April to July 2002. The reduction in consumer goods imports
stemmed from lower expenditure on all its subcategories, in particular, durable goods
imports.
Services
The expansion in the surplus on the services account, relative to 2002, primarily
reflected an increase of US$70.1MN in net travel receipts. Total visitor arrivals for the
review period rose by 14.5 per cent, relative to the corresponding period in 2002,
influenced by respective increases of 6.8 per cent and 29.3 per cent in foreign national
stopover and cruise visitor arrivals. In addition, there were reductions of US$16.2MN and
US$2.7MN in payments for the
“transportation” and “other services” subcategories
respectively.
Income
The reduction in the deficit on the income account for the review period was attributable
to an estimated decline of US$32.8MN in outflows related to the activities of the direct
investment companies.
Current Transfers
The contraction in net current transfers reflected respective declines of US$16.0MN and
US$6.2MN in net inflows to the private sector and net official transfers. The reduction in
net private transfers occurred in the context of significant growth of US$62.0MN in the
comparable period of 2002.
Capital & Financial Accounts
A deficit of US$6.1MN was recorded on the capital account for the review period, while a
surplus of US$284.6MN was registered on the financial account. Within the financial
account, net private investment inflows of US$140.6MN and net official outflows of
US$70.8MN were recorded. The net official payment, in conjunction with the deficits on
the current and capital accounts, led to a draw down of US$214.8MN in the net
international reserves of the Bank of Jamaica. At the end of July 2003, the level of gross
reserves stood at US$1165.2MN representing 18.4 weeks of imports of goods and 12.5
weeks of imports of goods and services.
The following table shows the balance of payments for July 2002, July 2003 and for the
periods April to July 2002 and April to July 2003.
BALANCE OF PAYMENTS SUMMARY
(US$MN)
1/
2/
1/
2/
1. CURRENT ACCOUNT
A. GOODS and SERVICES
a. GOODS BALANCE
Exports (f.o.b.)
Imports (f.o.b.)
July
2002
- 83.2
-131.1
-179.2
128.3
307.5
July
2003
-60.7
-97.6
-163.0
121.2
284.5
Change
22.5
33.5
15.9
-7.1
-23.0
Apr-July
2002
-346.2
-520.9
-619.9
453.6
1073.5
Apr-July
2003
-278.5
-446.7
-615.8
460.0
1075.8
Change
67.7
74.2
4.1
6.4
2.3
b. SERVICES BALANCE
Transportation
Travel
Other Services
48.1
-22.5
111.9
-41.3
65.7
-16.7
124.4
-42.0
17.6
5.8
12.5
-0.7
99.0
-85.2
332.0
-147.8
169.1
-69.0
383.2
-145.1
70.1
16.2
51.2
2.7
B. INCOME
Compensation of employees
Investment Income
-50.3
13.8
-64.1
-50.0
7.9
-57.9
0.3
-5.9
6.2
-201.0
27.7
-228.7
-185.3
16.1
-201.4
15.7
-11.6
27.3
C. CURRENT TRANSFERS
Official
Private
98.2
9.8
88.4
86.9
7.6
79.3
-11.3
-2.2
-9.1
375.7
34.7
341.0
353.5
28.5
325.0
-22.2
-6.0
-16.0
2. CAPITAL & FINANCIAL ACCOUNT
A. CAPITAL ACCOUNT
a. Capital Transfers
Official
Private
83.2
-0.9
-0.9
0.0
-0.9
60.7
-1.4
-1.4
0.0
-1.4
-22.5
-0.5
-0.5
0.0
-0.5
346.2
-5.6
-5.6
0.1
-5.7
278.5
-6.1
-6.1
0.0
-6.1
-67.7
-0.5
-0.5
-0.1
-0.4
b. Acq./disposal of non-prod. non-fin'l assets
0.0
0.0
0.0
0.0
0.0
0.0
84.1
-30.0
75.8
38.3
62.1
-19.7
79.3
2.5
-22.0
10.3
3.5
351.8
-9.0
163.1
197.7
284.6
-70.8
140.6
214.8
-67.2
-61.8
-22.5
B. FINANCIAL ACCOUNT
Other official investment
Other private investment 3/
Change in Reserves (minus = increase)
1/ Revised
2/ Provisional
3/ Includes errors & omissions
BANK OF JAMAICA
18-Feb-04