Jamaica - Achieving macro-stability and removing constraints on growth : country economic memorandum
Hussain, Athar | Stern, Nicholas H. | Burki, Shahid Javed
This report provides a macroeconomic framework to support the Jamaican Government's efforts to achieve macro stability, promote higher growth, and reduce poverty. It details the recent economic difficulties and discusses a mix of monetary and fiscal policies that could lower inflation. The recent economic performance of Jamaica has included definite progress in several areas (specifically foreign exchange liberalization, deregulation, and privatization). Unfortunately, the expansive monetary policy, based in government deficits, money supply growth, and wage increases, has led to higher inflation. The efficiency of long term investments has been hampered by economic uncertainty and high inflation as well as structural impediments. These include: modernizing the financial sector, improving the quality of the labor force and labor market functioning, providing critically needed infrastructure while improving the regulatory frameworks, improving the performance of the public sector, and unburdening the small business sector. The poverty situation is updated and shows that while the Government's social programs have provided some support to the poor during 1991-1994, this has been offset by high inflation and low growth during that period. In the future, higher growth will be necessary to make a significant reduction in poverty.
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