KINGSTON: Jamaica registered its first current account surplus in over a decade during the first three months of 2015.
Higher tourism receipts helped, but a reduced trade deficit and lower shipping costs factored more in the positive balance for net foreign exchange earnings, excluding capital flows, such as debt financing and foreign direct investments.
According to the latest Bank of Jamaica (BOJ) data, the surplus of US$39.4 million during the quarter ending March reflected a US$149.5 million improvement over the comparative three-month period in 2014. The central bank last saw a surplus in the March 2004 quarter, according to the BOJ.
Jamaica still had a large trade deficit of US$770.1 million for the quarter. However, that was US$82 million shy of the negative trade balance recorded for the first three months of 2014. Exports fell by US$83 million, but imports fell by an even larger amount – US$165 million, owing largely to Jamaica’s reduced oil bill.
There were a few good earners among goods exported overseas, such as ackee exports, which jumped from US$2.8 million in the first three months of 2014 to US$5.5 million in the quarter under review. Albeit, that was hardly enough to offset the fall off in export earnings, primarily attributed to a US$41 million decline in mineral fuel exports, reflecting lower international oil prices.
On the other hand, low oil prices translated into mineral fuel imports totalling US$310 million in the first three months of 2015, compared with US$532 million in the corresponding quarter last year. It also led to a significant reduction in the cost of freight – the transportation sub-account improved by US$62 million.
Increased earnings from tourism, in the context of growth of five per cent in stop-over visitor arrivals for the review quarter, resulted in a US$48 million increase in the travel sub-account.
Goods And Services Deficit
Consequently, earnings from services shrank the overall trade deficit to US$454 million in the first quarter of 2015. Although profits repatriated overseas by multinational firms increased by US$8 million to US$57 million in the review period, the $500 million in net remittances more than covered the deficit on goods and services.
“With respect to financing for the review period, net private and official capital inflows were more than sufficient to finance the current and capital accounts,” said the BOJ in its latest Balance of Payments report. The net international reserves (NIR) increased by US$292.6 million for the quarter.
BOJ’s gross reserves at end – March 2015 – amounted to US$2.69 million representing 19.9 weeks of projected goods and services imports.”
The central bank’s gross reserves fell to US$2.54 billion by the end of June, largely due to the repayment of a US$300 million Government of Jamaica eurobond.
