News Release
21 August 2001
JAMAICA: BALANCE OF PAYMENTS DEVELOPMENTS
May 2001 & April – May 2001
The current account of the balance of payments recorded a deficit of US$64.5M for May 2001, relative to
the deficit of US$28.7M recorded for May 2000. With the exception of the income sub-account, all the
sub-accounts contributed to the deterioration in the current account.
Merchandise Trade
Relative to May 2000, the merchandise trade deficit widened by US$11.9M to US$138.2M, reflecting a
contraction of US$20.6M in earnings from exports, which outweighed a reduction of US$8.7M in
payments for imports. Contributing to the decline in the value of exports was a reduction of US$6.0M in
receipts from alumina exports, as well as a decline of US$12.4M in earnings from non-traditional exports.
The decline in earnings from the non-traditional group resulted mainly from contractions in the values of
garment exports and chemicals.
Services
The services account recorded a surplus of US$29.4M for the review month, US$2.3M below the surplus
recorded for May 2000. The reduced surplus largely reflected an increase of US$5.1M in net payments
for other services, which was partially countered by an increase of US$2.1M in net travel receipts.
Income
The income account recorded a deficit of US$24.5M for May 2001, relative to the deficit of US$32.8M
recorded for May 2000. This out-turn primarily reflected a reduction of US$7.9M in net investment income
outflows, largely related to a fall-off in the imputed profitability of the direct investment companies.
Current Transfers
Net receipts from current transfers declined by US$29.9M to US$68.8M for May 2001, relative to the
comparable month of 2000. This performance was affected by a contraction of US$46.2M in inflows to the
official sector, reflecting the non-repetition of payments for cellular licenses as had been received in the
previous year.
An increase in private remittances of US$16.3M served as a partial countervailing
influence.
Capital and Financial Accounts
The financial account registered a surplus of US$66.0M, representing an expansion of US$39.1M relative
to May 2000. Within the financial account, a surplus of US$374.2M for official investments was recorded,
reflective of the Government of Jamaica Eurobonds that were issued in that month. A surplus of
US$15.6M was recorded for private investments, US$76.9M below the surplus recorded in May 2000.
The surpluses relating to official and private investments were more than sufficient to finance the deficits
on the capital and current accounts, thus facilitating a build-up of US$198.8M in the net international
reserves of the Bank of Jamaica, and US$125.0M in the reserves of the Government of Jamaica for the
month.
For the period April to May 2001 the current account deficit expanded by US$39.4M to US$46.8M,
relative to the deficit recorded for the period April to May 2000. The deterioration in the current account
reflected a higher level of net payment on the goods account and a lower surplus on the current transfers
account, which together outweighed the improvements in the services and income accounts.
Merchandise Trade
For the review period, the trade deficit deteriorated by US$31.3M to US$232.1M relative to the deficit
recorded for April to May 2000. This performance resulted from an expansion of US$8.0M in payments
for imports and a contraction of US$23.3M in earnings from exports. The growth in imports was attributed
to higher spending of US$16.4M and US$9.0M on consumer and capital goods, respectively, with a
reduction of US$24.0M in raw material imports acting as a countervailing influence. The decline in exports
emanated from respective contractions of US$15.1M, US$4.9M and US$2.1M in earnings from nontraditional exports, major traditional exports and re-exports. In particular, there were reductions in
earnings from garments, chemicals, food and alumina exports.
Services
For the review period, a surplus of US$101.3M was recorded on the services account, US$8.4M above
the surplus recorded for the period April to May 2000. Accounting for this performance were respective
improvements of US$13.9M and US$0.8M in net travel receipts and net payments for transportation
services, which outweighed higher payments of US$6.3M for other services. The travel sector benefited
from a 5.2 per cent upturn in foreign national stopover arrivals for the period.
Income
The income account recorded a deficit of US$50.9M for the review period, relative to the deficit of
US$57.7M recorded for April to May 2000. The improvement on the income account was attributed to
reduced net investment income outflows of US$6.0M, resulting from lower interest payments associated
with Government of Jamaica debt servicing and lower imputed profit remittances of the direct investment
companies.
Current Transfers
Net receipts from current transfers declined by US$23.3M to US$134.9M for the review period relative to
the period April to May 2000. This performance largely reflected the non-repetition of payments for
cellular licenses to the official sector as had been received in the previous year. Growth of US$22.8M in
net private sector transfers partly offset the decline in the net flows to the official sector.
Capital & Financial Accounts
The capital account recorded a deficit of US$3.1M for the period April to May 2001, a deterioration of
US$3.9M relative to the comparable period of 2000. A surplus of US$49.9M was recorded on the financial
account, US$43.3M above the surplus recorded for the comparable period in 2000. Within the financial
account, net official inflows of US$364.4M, associated mainly with Government’s foreign borrowing, and
net inflows of US$4.8M relating to private investments were recorded. These inflows were more than
sufficient to finance the deficits on the current and capital accounts, and facilitate a buildup of US$194.3M
in the net international reserves of the Bank of Jamaica, and US$125.0M in the reserves of the
Government of Jamaica.
At the end of May 2001, the Bank’s gross reserves stood at US$1558.1 million, representing
approximately 26.4 weeks of goods imports or 18.0 weeks of imports of goods and services.
The following table shows the balance of payments for May 2000 and May 2001, and for the periods April
to May 2000 and April to May 2001.
BALANCE OF PAYMENTS SUMMARY
US$M)
1. CURRENT ACCOUNT
A. GOODS and SERVICES
a. GOODS BALANCE
Exports (f.o.b.)
Imports (f.o.b.)
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
a. Capital Transfers
Official
Private
b. Acq./disposal of non-prod. non-fin'l assets
B. FINANCIAL ACCOUNT
Other official investment
Other private investment 3/
Reserves
1/ Revised
2/ Provisional
3/ Includes errors & omissions
1/
May
2000
2/
May
2001
-28.7
-94.6
-126.3
135.3
261.6
31.7
-24.8
76.0
-19.5
-32.8
2.5
-35.3
98.7
49.8
48.9
28.7
1.8
1.8
2.8
-1.0
0.0
26.9
-33.3
92.5
-32.3
-64.5
-108.8
-138.2
114.7
252.9
29.4
-24.1
78.1
-24.6
-24.5
2.9
-27.4
68.8
3.6
65.2
189.5
-1.5
-1.5
0.0
-1.5
0.0
191.0
374.2
15.6
-198.8
1/
2/
Apr-May Apr-May
2000 2001/02
-7.4
-107.9
-200.8
272.1
472.9
92.9
-39.5
172.7
-40.3
-57.7
3.0
-60.7
158.2
53.5
104.7
7.4
0.8
0.8
3.1
-2.3
0.0
6.6
-46.4
125.8
-72.8
-46.8
-130.8
-232.1
248.8
480.9
101.3
-38.7
186.6
-46.6
-50.9
3.8
-54.7
134.9
7.4
127.5
171.8
-3.1
-3.1
0.2
-3.3
0.0
174.9
364.4
4.8
-194.3