Jamaica

Politics:

• Analysis

  Jamaica politics: US presses government to curb lotto scam

  Pressured by the US, Jamaica is set to pass the Fraudulent Transactions Special Provisions Act to crack down on a lottery scam, which defrauds elderly Americans of at least US$300m annually. The law demonstrates the commitment of the People's National Party (PNP) government to reducing crime, which damages Jamaica's international image and hurts the vital tourism sector. The move comes amid other efforts, especially from the IMF, to solidify international support for the country.

  Jamaicans involved in the scam target victims with phone calls informing them that they have won a lottery or sweepstake and must send money to cover taxes in order to claim their prize. Approximately 30,000 such calls are made daily, according to authorities. Locally, police say that the scheme fuels gang violence in the tourism mecca of the north coast, home not just to the scammers, but also to a growing number of call centres servicing the US market-which is Jamaica's largest trading partner and source of tourists. Police report that disputes among the fraudsters account for 80% of the murders committed in the north-west parish of St James, where the tourism capital of Montego Bay is located.

  The scam is also increasing the cost of doing business in Jamaica, as call-centre operators have to pay extra to fingerprint and polygraph workers. Security has also had to be improved to prevent any leaking of confidential client information that can be used to target victims. Remittance inflows, which totalled almost US$1.8bn in 2012, have also been affected, with Western Union last year having to close its 14 Montego branches temporarily while it upgraded security procedures.

  Current laws needed upgrading

  Gaps in Jamaican legislation have hindered legal action against the swindlers, and police have often been forced to seek convictions for lesser offences. The new bill increases penalties and empowers the state to confiscate ill-gotten assets, among other provisions. It specifically targets criminals involved in identity theft, fraud, using technology dishonestly, and threatening and coercing victims over the telephone. Jamaica's House of Representatives has already passed the bill, but it has been delayed in the Senate so that lawmakers can address concerns that it could place further burden and costs on local business operators.

  Jamaica's minister of national security, Peter Bunting, recently travelled to Washington to meet US officials to discuss the scam and the possible use of measures such as extradition. He is hopeful that the legislation will vastly accelerate the number of convictions. The lotto scam was also the subject of a US Senate hearing on March 8th, during which at least one senator criticised Jamaica's government for not showing sufficient will until now to address the problem. However, the US ambassador to Jamaica, Pamela Bridgewater, praised the "commitment and resolve" of Jamaican authorities.

  Governance under scrutiny

  The greater attention being paid to the issue by both governments comes at a time when Jamaica must demonstrate sound governance to meet conditions set under a new loan agreement with the IMF. The effort to address the lottery swindle could bolster US support for Jamaica and its efforts to resolve its economic problems. It could also help the PNP to gain more voter recognition for reducing crime. The government has made gains in reducing crime since taking office in 2012, and the new bill demonstrates a commitment to continue this effort.

  Nonetheless, crime is likely to remain a serious problem in Jamaica into the foreseeable future, fuelled by high unemployment, a weak economy and long-standing gang networks. Indeed, the government's latest efforts may even lose it some support in north coast communities, where scammers often use their earnings to curry favour and dispense largesse.

  March 18, 2013

• Background

  Jamaica: Constitution and institutions

  A UK-style parliamentary system

  Under the constitution promulgated on independence in August 1962, the head of state is the British monarch, represented by a governor-general appointed on the advice of the prime minister. The legislature is bicameral, with an elected House of Representatives and a nominated Senate. The highest executive power is vested in the cabinet, members of which are chosen by the prime minister from both chambers of parliament. The attorney-general is a member of the lower house and acts as the cabinet's legal adviser.

  The powers and procedures of parliament correspond closely to those of the British system. The Senate comprises 21 members appointed by the governor-general: 13 on the advice of the prime minister and eight on the advice of the opposition leader. If there is no opposition, eight independent senators are appointed after consultation with the prime minister. The House of Representatives has 60 members elected by universal adult suffrage for a period not exceeding five years.

  The judicial system is based on English common law and practice. The judiciary consists of a Supreme Court, a Court of Appeal, magistrates' courts and other lower courts. The Judicial Committee of the UK's Privy Council is the final court of appeal. Along with many of its partners in the Caribbean Community (Caricom), Jamaica is expected eventually to switch its final appeal court to the Caribbean Court of Justice (CCJ), which was established in 2005. The CCJ is to adjudicate on disputes within the Caricom single market, and will be the final court of appeal for several member states. In 2004 the government tabled a bill to amend the constitution to replace the Privy Council with the CCJ as Jamaica's final court of appeal. However, a Privy Council ruling in 2005 produced a constitutional impediment to the recognition of the CCJ as Jamaica's final court of appeal, and a referendum may now be needed before such a change can be implemented.

  February 29, 2008

• Structure

  Jamaica: Political structure

  Official name

  Jamaica

  Form of government

  Representative democracy

  Head of state

  Queen Elizabeth II, represented by the governor-general, who is appointed on the recommendation of the Jamaican prime minister

  The executive

  Prime minister, chosen from the majority party in the House of Representatives; heads a cabinet of not fewer than 11 members

  National legislature

  Bicameral: 63-member House of Representatives (the lower house) directly elected for a five-year term; 21-member Senate (the upper house), appointed for the same concurrent term by the governor-general, with 13 seats allocated on the advice of the prime minister and eight on the advice of the leader of the opposition

  Legal system

  UK-style judicial system leading to the Supreme Court at the apex; the Judicial Committee of the Privy Council in the UK is currently the final court of appeal

  National elections

  December 2011; the government calls national elections and these must be held by December 2016

  National government

  The PNP holds 42 seats in the lower house; the JLP holds 21 seats

  Main political organisations

  Government: People's National Party (PNP)

  Opposition: Jamaica Labour Party (JLP); National Democratic Movement (NDM); United People's Party (UPP)

  Main members of cabinet

  Prime minister, defence, development, information: Portia Simpson Miller

  Key ministers

  Agriculture & fisheries: Roger Clarke

  Attorney-general: Patrick Atkinson

  Education: Ronald Thwaites

  Finance, planning & public service: Peter Phillips

  Foreign affairs & foreign trade: Arnold Nicholson

  Health: Fenton Ferguson

  Industry, investment & commerce: Sharon Ffolkes-Abrahams

  Justice: Mark Golding

  Labour & social security: Derrick Kellier

  Mining, energy & ICT: Phillip Paulwell

  National security: Peter Bunting

  Tourism & entertainment: Damian Crawford

  Transport, works & housing: Omar Davies

  Water, land, environment & climate change: Robert Pickersgill

  Youth & culture: Lisa Hanna

  Central bank governor

  Brian Wynter

  March 05, 2013

• Outlook

  Jamaica: Key developments

  Outlook for 2013-17

  • The People's National Party (PNP) government, led by Portia Simpson Miller, will enjoy a large parliamentary majority (42 of 63 seats), which will support stability. However, fiscal adjustment measures will test its popularity.
  • Economic policy will be guided by a new IMF programme, expected to be approved soon after more than a year of negotiations. The agreement will provide US$750m of financing under a 48-month Extended Fund Facility.
  • Tax hikes, government austerity, weak domestic demand and tepid external conditions will limit GDP growth. After estimated shrinkage of 1% in 2012, GDP will be flat in 2013 and grow slowly in 2014-17, by an average of 1.9%.
  • The fiscal deficit will narrow in 2013/14 thanks to fiscal reforms but widen in 2014/15. Structural weaknesses, slow revenue growth and the difficulty of cutting primary spending will keep the risk of slippage against targets high.
  • A domestic debt exchange will reduce the government's interest burden and, over the long term, ease its debt as a share of GDP. However, a meaningful reduction will be tough to achieve without substantial fiscal consolidation.
  • Inflation will be driven up early in 2013 by tax increases and will average 8.3% in the year (up from an average 6.9% in 2012). It will ease to 6.4% in 2014 before increasing thereafter as global oil prices start to rise again.
  • The current-account deficit as a share of GDP will stay large, averaging 8% in 2013-17, owing to Jamaica's heavy import dependence. Real growth in export earnings will average 4.7% annually; imports will grow by an average 4.9%.

  Review

  • The government launched a domestic debt swap to lower rates and lengthen maturities. This is the second exchange in three years, and underscores the severity of Jamaica's onerous debt load, which stands at 140% of GDP.
  • Concerns over the stability of the financial system following the debt exchange have been quelled by the reactivation of the financial-sector support facility (FSSF).
  • A new tax package aims to raise revenue of J$15.9bn (around US$169m) to narrow the yawning deficit and pave the way for a new accord with the IMF. The Fund announced a preliminary staff-level agreement on February 15.th.
  • The Bank of Jamaica (the central bank) cut its policy rate by 50 basis points, to 5.75%, effective February 25th, in a bid to jump-start stalled economic growth.
  • Net foreign reserves continued to slide in January, by 10.4% month on month to US$1bn. This follows a loss of 43% in 2012. Despite this, the currency weakened further, to J$94.14:US$1 at month's end, from J$92.7:US$ at end-2012.

  March 05, 2013

Economy:

• Background

  Jamaica: Economic background

  Main economic indicators, 2007
  (Economist Intelligence Unit estimates)
  Real GDP growth (%)	1.2
  Consumer price inflation (av; %)	9.5
  Current-account balance (US$ m)	-1,400
  Exchange rate (av; J$:US$)	69.01
  Population (m)	2.7
  External debt (year-end; US$ m)	9,619.0
  Source: Economist Intelligence Unit, CountryData.

  Download text file (csv format)

  February 29, 2008

• Structure

  Jamaica: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 05, 2013

• Outlook

  Jamaica: Country outlook

  Jamaica: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The centre-left People's National Party (PNP) government, led by Portia Simpson Miller, enjoys a large parliamentary majority (with 42 of the 63 seats) and until now has enjoyed strong popular support. Although there are few obstacles to its ability to pass legislation, the government faces a potential rise in discontent among public-sector workers and the population at large as it implements tax increases and other measures to address a large fiscal deficit and unsustainable debt burden. Under a new IMF Extended Fund Facility (EFF), which the Economist Intelligence Unit expects will be approved in the near term, the government is likely to cut staff, freeze wages and make other public-sector spending cuts. These measures will be challenging for the left-of-centre PNP, which has a loyal base among the civil service and closer relations with the unions than the opposition centre-right Jamaican Labour Party (JLP). However, because of these strong ties, the PNP government may be more successful in implementing reforms than the JLP administration that preceded it, particularly if it can demonstrate a vision to build a foundation for sustainable economic growth. The JLP, damaged by a poor showing in the December 2011 general election and in March 2012 local polls, suffers from internal divisions, as highlighted in its December 2012 party elections, when several deputy leaders faced challenges from within. As a result, the JLP will pose little threat to the government in the medium term.

  ELECTION WATCH: The government must call the next election by December 2016. Prospects for the PNP to remain in power beyond that election will hinge on its progress in addressing economic weaknesses, and then jump-starting growth and creating jobs--which will prove challenging to achieve in the short term given severe fiscal constraints. At this early stage, we expect that it will still be in a better position than the JLP to win the next election, because the opposition party may struggle to retain unity, rebuild its credibility and present an attractive alternative to the PNP.

  INTERNATIONAL RELATIONS: Jamaica's foreign-policy priorities will focus on regional co-operation to combat drug-trafficking and on strengthening political and economic ties with the US, its main trade partner, as well as with the Caribbean Community (Caricom), another important partner. Relations with Venezuela will be amicable, anchored by the PetroCaribe agreement, under which Venezuela provides petroleum to neighbouring countries on concessionary terms. The future of the programme is uncertain owing to the poor health of Venezuela's president, Hugo Chávez, and because of that country's growing financial constraints. However, our baseline scenario is that, if Mr Chávez were unable to continue in office, he would be succeeded by another Chavista, who would be likely to retain PetroCaribe.

  POLICY TRENDS: Policymaking will be complicated by the high risk of financial- and currency-market jitters, stoked by concerns over Jamaica's large fiscal deficit and huge public debt, as well as still-weak global conditions. Policy will focus on bolstering the public finances and reducing the onerous debt burden, under the aegis of a new IMF agreement. The Fund announced in February that this would take the form of a 48-month EFF worth US$750m. Prior to finalising the accord, the government launched a domestic debt exchange (the second in three years) to reduce interest payments and lengthen maturities, affecting around US$9bn in debt, or around 45% of the total public debt stock. It has introduced a tax package to raise J$15.9bn (US$169m). Both the debt swap and the tax measures appear to be preconditions for the EFF. Other details of the IMF agreement have not been released, although we expect that the government may freeze public-sector wages, and commit to further spending cuts as well as reforms to the public pension system. The EFF will replace a US$1.3bn, 27-month stand-by arrangement that expired in May 2012.

  ECONOMIC GROWTH: Slow growth in the US, Jamaica's main trading partner, and weak conditions in Europe will continue to weigh on the economy in 2013, after which external conditions will gradually improve. We have revised down our estimate for 2012 growth to a contraction of 1%, as mild shrinkage in the first three quarters was compounded by the impact of Hurricane Sandy in the fourth. Domestic demand will remain feeble as tax increases have an impact on private consumption and the government squeezes spending. We expect minimal GDP growth in 2013, of 0.2%, supported mainly by more stable global conditions and higher demand for Jamaica's exports.

  INFLATION: Despite weak demand-side pressures, consumer price inflation was 8% at end-2012. We expect monthly inflation to rise in the early part of 2013, owing to a weaker currency, higher food prices following Hurricane Sandy and the impact of new tax hikes. Inflation will slow later in the year, bringing the year-end rate to 6.9%. With global oil prices forecast to strengthen from 2014, and domestic demand expected to recover gradually, we forecast inflation to pick up again thereafter. Any spikes in oil and food prices beyond our current forecasts, or further weather-related disruptions, would push inflation higher.

  EXCHANGE RATES: Investor nervousness over delays in completing an IMF agreement has put downward pressure on the Jamaican dollar--which the Bank of Jamaica (BoJ, the central bank) has attempted to counter with heavy market intervention. The exchange rate weakened to J$92.7:US$1 at end-2012, a nominal depreciation of 6.8% year on year; it weakened further, to J$94.1:US$1, at end-January. We forecast a slower rate of depreciation (of 3% year on year) in 2013, on the assumption that IMF inflows will support the currency. This will help to contain imported inflation and potential rises in external debt-servicing costs (external public-sector debt was 44% of total public debt in 2012). However, downside risks remain. If the government misses targets under the IMF accord, investor sentiment could sour and capital flight speed up. Under this scenario, the BoJ will have little scope to defend the currency, owing to an eroded reserves position and limited monetary policy instruments.

  EXTERNAL SECTOR: We estimate that the current-account deficit was high, at 10.5% of GDP, in 2012. We forecast that it will ease to 8% of GDP in 2013, supported by improved exports earnings for alumina and bauxite--Jamaica's main commodity exports--owing both to increased production and to higher global prices. Domestic demand will stay feeble and oil prices will dip further, curbing import growth. However, the cost of imported fuel will start to rise from 2014, and this will coincide with modest growth in demand for imported goods as economic conditions improve. This will sustain a large trade deficit and cause the current-account deficit to widen again from 2015. Some support will come from steady services surpluses as tourism earnings grow. Remittances inflows (which account for the bulk of transfers) will grow moderately (by 5% annually) as employment conditions abroad improve, particularly in the US. Private capital inflows and foreign direct investment (FDI) will increase in 2013-17, but Jamaica will continue to rely on multilateral loans to meet the external financing requirement, given insufficient reserves levels. Net international reserves, as measured by the BoJ, (whose data differ from the IMF data on which our forecasts are based) were US$1.1bn at end-2012, down by 43% from end-2011, and US$1bn at end-January 2013.

  March 05, 2013

• Forecast

  Jamaica: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	-1.0	0.2	1.0	2.1	2.4	2.0
  Gross fixed investment growth	-2.0	1.5	2.0	6.0	6.0	5.0
  Unemployment rate (av)	14.3	14.5	14.5	14.0	13.0	12.0
  Consumer price inflation (av)	6.9c	8.3	6.4	7.1	7.6	7.7
  Consumer price inflation (end-period)	8.0c	6.8	7.0	7.2	7.5	7.8
  Treasury-bill rate	6.3	5.8	5.8	6.0	6.3	6.3
  Central government balance (% of GDP)d	-5.0	-3.8	-4.6	-4.6	-6.4	-6.5
  Exports of goods fob (US$ bn)	1.6	1.7	1.8	1.9	2.0	2.2
  Imports of goods fob (US$ bn)	5.8	5.7	5.9	6.3	6.9	7.5
  Current-account balance (US$ bn)	-1.6	-1.2	-1.1	-1.3	-1.5	-1.9
  Current-account balance (% of GDP)	-10.5	-7.9	-7.0	-7.4	-8.3	-9.3
  External debt (year-end; US$ bn)	14.3	14.1	13.7	13.2	13.1	12.6
  Exchange rate J$:US$ (av)	88.78	94.39	95.73	97.41	99.22	100.92
  Exchange rate J$:US$ (end-period)	92.65	94.80	96.33	98.13	99.75	101.53
  Exchange rate J$:€ (av)	114.1	125.5	125.7	123.7	125.0	127.3
  Exchange rate J$:€ (end-period)	121.7	125.1	125.7	123.2	125.7	127.8
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Actual. d Fiscal years beginning in April.

  Download the numbers in Excel

  Download text file (csv format)

  March 05, 2013

View detailed map

Country Briefing

Land area

10,991 sq km

Population

2.74m (2011; IMF estimate)

Main towns

Population in '000 (2001 census):

 Kingston (capital): 658

 Kingston metropolitan area: 579

 Spanish Town: 132

Climate

Tropical all year; more temperate inland

Weather in Kingston (altitude 34 metres)

Hottest months, July and August, 26-32°C (average monthly minimum and maximum); coldest months, January and February, 22-30°C; driest month, February, 15 mm average rainfall; wettest month, October, 180 mm average rainfall

Language

English and local patois

Measures

UK (imperial system), converting to the metric system

Fiscal year

April 1st to March 31st

Currency

One Jamaican dollar (J$)=100 cents; exchange rates in 2011: J$85.9:US$1 (average); J$86.4:US$1 (year-end)

Time

5 hours behind GMT

Public holidays

New Year's Day; Ash Wednesday; Good Friday; Easter Monday; Labour Day (26th May); Emancipation Day (1st August); Independence Day (6th August); National Heroes' Day (16th October); December 25th and 26th

January 07, 2013