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U.S. DEPARTMENT OF STATE
JAMAICA: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                             JAMAICA

                     Key Economic Indicators
        (Millions of U.S. dollars unless otherwise noted)


                                     1992      1993   1994 1/

Income, Production and Employment:

Real GDP (1986 base year)           768.7     712.5     546.4
Real GDP Growth Rate 2/               1.4       1.2       2.0
GDP (at current prices)
By Sector:
  Agriculture/Forestry/Fishing      251.2     320.3       N/A
  Mining/Quarrying                  297.6     277.2       N/A
  Manufacturing                     619.1     703.6       N/A
  Construction/Installation         407.9     491.5       N/A
  Retail Trade                      745.1     904.3       N/A
  Transportation/Storage/
    Communication                   242.7     303.9       N/A
  Real Estate/Business Services       392       429       N/A
  Government Services               191.6     360.9       N/A
  Other                               6.7      23.9       N/A
  Total                            3153.9    3814.6       N/A
Real GDP Per Capita ($, 1986 base)  314.0     288.2     221.2
Labor Force (000s)                 1074.9    1083.0       N/A
Unemployment Rate (pct.)             15.7      16.3       N/A

Money and Prices:

Money Supply (M2)                  1209.5    1549.9    1372.8 3/
Commercial Interest Rate             46.4      61.3      65.0
Personal Savings Rate             15-28.8   15-25.0     15-30
Retail Inflation                     40.2      30.0      39.0
Wholesale Price Index                 N/A       N/A       N/A
Consumer Price Index                419.6     546.0     758.9 4/
Exchange Rate (JD/USD)              23.00     25.11     33.40

Balance of Payments and Trade:

Total Exports (FOB)                1053.6    1044.5      1200
  Exports to U.S.                   386.3     379.9       397
Total Imports (CIF)                1775.4    2165.2      2230
  Imports from U.S.                 943.6    1074.3      1128
AID from U.S. (FY 93, 94, 95) 5/     50.4      34.6      22.5
AID from Other Countries 6/         170.1     429.0       N/A
External Public Debt               3678.0    3647.2    3608.0 7/
Debt Service Payments (actual)      637.9     542.1     539.9
Net Official Reserves (Dec.)        -50.7      70.8     194.8 8/
Trade Balance                      -721.8   -1120.7   -1030.0
  Trade Balance with U.S.          -557.3    -694.4    -731.2


N/A--Not available

1/ Projected.
2/ Growth rate is based on Jamaican dollars whereas real GDP is
shown in U.S. dollars.
3/ Figure is based on January-June data.
4/ Fiscal year ending December.
5/ FY '95 does not include military assistance.
6/ Commitments from Jamaica's cooperation partners.
7/ Figure is based on January-May data.
8/ Figure is based on January-June data.


1.  General Policy Framework

    Economic Structure:  Jamaica is an import-oriented economy
with imports of goods and services accounting for two-thirds of
GDP.  Tourism and the bauxite/alumina industry are the two
major pillars sustaining the economy.  In 1993 these two
industries accounted for about 77 percent (USD 1535.9 million)
of the country's foreign exchange earnings.  Hence, both GDP
and foreign exchange inflows are extremely sensitive to
external economic factors.  Agriculture employs 24 percent of
the workforce, and contributes about eight percent of GDP.  The
relatively small size of the Jamaican economy, and relatively
high costs of production (e.g., interest rates) has reduced the
contribution of the manufacturing sector over the last several
years to about 18 percent in 1993.  However, the Government of
Jamaica has made some progress in promoting investment in
certain nontraditional export-oriented manufacturing
enterprises (especially the garment industry) in the last few
years.  About 56 percent of Jamaica's work force is employed in
the services sector, contributing 59 percent of GDP. 

    Economic Policies:  The Jamaican economy grew by 1.2
percent in 1993, following a growth of 1.4 percent in 1992. 
The pace of economic growth thus far in 1994 has been modest
due to tight monetary and fiscal policies.  However, continued
high inflation (arising from wage increases, high interest
rates, and drought during the latter part of the year, among
other factors) has led to declining real incomes for the
majority of the population.  The government has reduced public
sector operations through privatization of certain public
entities.  To date, about 29 entities have been divested and
the government is seeking to divest some 78 entities in the
next few years to increase economic efficiency.  Under the
Common External Tariff, the tariff rate is to be phased down
from the current 5-30 percent to 5-20 percent by 1998.

    Fiscal Policy:  The Jamaican fiscal year (JFY) 1994/95
budget calls for Jamaican dollars (JD) 55.2 billion in outlays,
an increase of 27.2 percent over the previous fiscal year's
budget, but will be about 10 percent lower in real terms given
the 37.1 percent inflation rate in JFY 93/94.  The present
budget reflects a tight budgetary situation with only 38
percent of the outlay directed to meet the economic development
and social needs of the country.  The other 62 percent will be
used for debt servicing costs (49 percent), Bank of Jamaica
losses (3.5 percent), and government employee compensation (8.5
percent).

    The government hopes to finance the budget through an
expected total revenue of JD 39.9 billion through recurrent,
capital revenue, and the capital development fund.  The balance
is proposed to be financed from external debt (44.7 percent of
total deficit) and internal debt (55.3 percent).  Furthermore,
in order to ease the pressure for foreign exchange and to
reduce inflation to the target of one percent per month for FY
94/95, the government has increased the issue of local
registered stocks, treasury bills and certificates of deposit
(offering high interest rates) to mop up excess liquidity.  In
the past, the Bank of Jamaica's open market operations were a
means by which the Government of Jamaica funded its fiscal
deficit.  The current budget, however, is a departure from the
recent practice of reliance on massive central bank assistance.

    Monetary Policy:  The Bank of Jamaica (BOJ) continued to
reduce spending demand by issuing long term securities (Local
Registered Stock, short-term certificates of deposit (CDs), and
T-bills) at very high interest rates (varying from 52 percent
in January 1994 to 37.5 percent in October 1994).  These
increases in deposit yields were transmitted through the
financial system and had the effect of raising commercial bank
lending rates as high as 65 percent in September 1994. 
Interest payments on the maturing securities have served to
increase liquidity, necessitating additional security
offerings.  Funds acquired by the BOJ through issuance of CDs
were generally borrowed by the government and used to finance
current expenditures.  It is contemplated that the BOJ will
reduce its reliance on CDs as an instrument for mopping up
excess liquidity in the future.  The BOJ has increased the
ceiling on treasury bills recently from JD 7.5 billion to JD 12
billion.  Other instruments used by the government to control
aggregate demand and stabilize the exchange rate include the
reserve requirements of financial institutions (50 percent),
and issuing a USD 12.5 million bond (the first such issuance
was in September 1993 for USD 20 million).  The Bank of Jamaica
achieved a positive stock of net international reserves (NIR)
by the end of 1993 for the first time since the mid 1970's. 
The NIR has remained positive through 1994 and has reached the
level of USD 316.4 million as of July 1994.


2.  Exchange Rate Policy

    On September 26, 1991, exchange controls were eliminated to
allow for free competition on the foreign exchange market.  The
principal remaining restriction is that foreign exchange
transactions must be effected through an authorized dealer. 
Licenses are regulated.  Any company or person required to make
payments to the government by agreement or law (such as the
levy and royalty due on bauxite) will continue to make such
payments directly to the BOJ.  There is also a requirement that
20 percent of foreign exchange purchases by authorized dealers
must be paid directly to the BOJ.  This represents a
significant reduction from the earlier requirement, lifted in
July 1994, for 28 percent of foreign exchange purchases to go
to the BOJ.  A requirement that 25 percent of foreign exchange
purchases go to Petrojam (the government monopoly for imports
of petroleum) is still in effect but is not fully utilized
given the availability of foreign exchange in the system.  When
Petrojam is privatized, this requirement will, of course, be
terminated completely.

    With the increased use of foreign currency by importers and
other earners of foreign exchange, together with the decline in
official inflows, the Jamaican dollar lost ground by 47 percent
in December 1993 over December 1992.  In an effort to increase
the official inflows of foreign exchange, the government
introduced and increased the number of cambios as authorized
dealers in April 1994.  To date, 116 licenses have been issued,
although only 46 are in operation.  This increase in authorized
dealers, along with high interest rates offered on the
government securities, has had a positive impact on the inflows
of foreign exchange.  For the period January-September 1994,
foreign exchange inflow into the official trading market
increased remarkably by 93.5 percent over the corresponding
period in 1993 to USD 996.6 million.  The weighted average
selling rate of one U.S. dollar was JD 33.45 in September
1994.  If this positive trend continues, U.S. exports to
Jamaica are likely to increase.


3.  Structural Policies

    Pricing Policies:  Prices are generally determined by free
market forces.  However, prices of certain items such as
domestic kerosene and bus fares are subject to price controls. 
Prices of these items can only be changed by ministerial
approval.  In addition, the margins of motor vehicle dealers is
restricted to 12.5 percent of CIF plus customs duty on motor
vehicles, and between 12.5 to 20 percent on motor vehicle
parts.  The Fair Competition Act was introduced in 1993 to
create an environment of free and fair competition and to
provide consumer protection.

    Tax Policies:  Taxation accounts for 90 percent of total
recurrent and capital revenue.  Tax revenue includes: personal
income tax (38 percent of tax revenue), value-added tax (29
percent), and import duties (12 percent).  Although no new
taxes have been imposed so far during FY 94/95, the government
proposes to raise additional revenue of about JD 723 million
through increases in the ad valorem tax on petroleum products,
the departure tax, and the general consumption tax on purchases
of motor vehicles.  Given the increase in the national minimum
wage from JD 300 to JD 500 per 40 hour workweek effective July
1994, the income tax threshold was raised from JD 18,408 to 
JD 22,464 effective January 1994 and will be increased to 
JD 35,568 effective January 1995.  Jamaica implemented the
Caribbean Economic Community (Caricom) Common External Tariff
(CET) on February 15, 1991 in order to enhance the region's
international competitiveness.  Under the CET, goods produced
in Caricom states are not subject to import duty. 
Third-country imports are presently subject to import duties
ranging between 5 percent and 30 percent, with higher rates
applicable to certain agricultural items, "non-basic" and
finished goods.  The tariff rate is to be phased down to 5 to
20 percent by 1998.  The Government of Jamaica offers
incentives to approved foreign investors, including income-tax
holidays and duty-free importation of capital goods and raw
materials.  The United States and Jamaica signed a bilateral
investment treaty in early 1994.

    Regulatory Policies:  All monopoly rights of the state
Jamaica Commodity Trading Company (JCTC) ceased December 31,
1991, but it retains responsibility for concessionary sales
such as PL-480.  The U.S. Embassy is unaware of any government
regulatory policy that would have a significant discriminatory
or adverse impact on U.S. exports.


4.  Debt Management Policies

    Jamaica's stock of external debt fell to JD 3.65 billion in
1993, the lowest since 1986.  The average annual decline over
the past three years has been 4.2 percent.  Cancellation by
official bilateral creditors, conversions on commercial bank
debt, debt servicing, and reduction in contracting new loans
contributed to this debt reduction.  Half of the public debt is
owed to bilateral donors (the United States is the largest
bilateral creditor), 35 percent to multilateral institutions, 9
percent to commercial banks, and 6 percent to other entities.

    Actual debt servicing during 1993 accounted for 22.6
percent (USD 637.9 million), of which 8.42 percent represents
interest payments.  The debt service burden in 1993 was lower
than for any year since 1984.  The ratio of total outstanding
debt to exports of goods and services declined from 156.3
percent in 1992 to 150.59 percent in 1993 due mainly to debt
reduction and improvement in exports.  Although the debt per
capita improved by 14.6 percent to USD 1,475 over the last four
years, debt servicing continues to be a major burden on the
government budget (49 percent).  Jamaica passed the June IMF
test for its Structural Adjustment Program.  The current IMF
agreement is expected to be Jamaica's last.  Jamaica negotiated
a new Multi-Year Rescheduling Arrangement (MYRA) with the Paris
Club of OECD creditor countries and agencies in 1992.  The MYRA
provides for rescheduling of USD 281.2 million of principal and
interest for the period October 1992 to September 1995.

    Under the debt conversion program (reducing foreign
commercial debt), about 30 percent or USD 119.4 million of
outstanding commercial debt has been converted over the last
five years.


5.  Significant Barriers to U.S. Exports

    Government Procurement Practices:  Government procurement
is generally effected through open tenders.  U.S. firms are
eligible to bid.  The range of manufactured goods produced
locally is relatively small, so instances of foreign goods
competing with domestic manufacturers are very few.

    Customs Procedures:  Due to the efforts of the Government
of Jamaica, customs procedures are being improved and
streamlined.  In order to facilitate the movement of goods, the
government has simplified the documentation and clearance
requirements for exporters.  Computerization of the entire
system is underway.


6.  Export Subsidies Policies

    The Export Industry Encouragement Act allows approved
export manufacturers access to duty-free imported raw materials
and capital goods for a maximum of ten years.  Other benefits
are available from the Jamaican Government's EX-IM Bank, 
including access to preferential financing through the Export
Development Fund, lines of credit, and export credit
insurance.  Jamaica does not adhere to the GATT subsidies code.


7.  Protection of U.S. Intellectual Property

    Jamaica is a member of the World Intellectual Property
Organization (WIPO) and respects intellectual property rights. 
The Jamaican Constitution guarantees property rights and has
enacted legislation to protect and facilitate acquisition and
disposition of all property rights, including intellectual
property.  Jamaica is a member of the Bern Convention
(copyright) and intends to adhere to the Paris Convention for
the Protection of Industrial Property (i.e., patents and
trademarks).  The Government of Jamaica and the Government of
the United States signed a bilateral Intellectual Property
Rights Agreement in March, 1994.  The U.S. Embassy is not aware
of any complaint concerning the protection of intellectual
property in Jamaica.

    Patents:  There are plans to modernize the patents,
trademarks, and designs legislation.  Under the present
regulations, patent rights in Jamaica are granted for a period
of 14 years with the provision of extension for another seven
years.  The "novelty test" contained in the Jamaican patent
law, however, limits the definition of "novelty of invention"
to that which is novel in Jamaica, without reference to the
novelty of the invention abroad.  Further, patents granted in
Jamaica shall not continue in force after the expiration of the
patent granted elsewhere.  The periods of examination are long;
it can take years for a patent to be issued. 

    Copyrights:  The Jamaican Senate passed the Copyright Act
in February 1993 which entered into force September 1, 1993. 
The Act adheres to the principles of the Bern Convention and
covers a wide range of works, including books, music,
broadcasts, computer programs and databases.

    New Technologies:  There is no statute with regard to new
technologies.  Jamaica follows common law principles as
established in England.  Breaches of such laws can result in
either injunction or suit for damages.

    Impact on U.S. Trade:  Piracy of broadcasts and
pre-recorded video cassettes for distribution in the domestic
and regional market is widespread.  Video stores import a large
number of copyrighted motion pictures and television programs
each year.  However, a draft policy paper on cable television
was tabled in parliament in February 1994 which identified 100
unauthorized cable systems involving investment in Jamaica
valued at between JD 20-40 million.  The government is
presently examining submissions from the public before it
decides on the final licensing regime for the legal operation
of cable television.


8.  Worker Rights

    a.  The Right of Association

    The Jamaican Constitution guarantees the rights of assembly
and association, freedom of speech, and protection of private
property.  These rights are widely observed.

    b.  The Right to Organize and Bargain Collectively

    Article 23 of the Jamaican Constitution guarantees the
right to form, join and belong to trade unions.  This right is
freely exercised.  Collective bargaining is widely used as a
means of settling disputes.  The Labor Relations and Industrial
Disputes Act (LRIDA) codifies regulations on worker rights. 
About 15 percent of the work force is unionized, and unions
play an important economic and political role in Jamaican
affairs.  In the Kingston Free Zone, none of the 18 factories
are unionized.  Jamaica's largest unions, including the
National Workers' Union, have been unable to organize workers
in the Free Zone.

    c.  Prohibition of Forced or Compulsory Labor

    Forced or compulsory labor is not practiced.  Jamaica is a
party to the relevant ILO conventions.

    d.  Minimum Age for Employment of Children

    The Juvenile Act prohibits child labor, defined as the
employment of children under the age of twelve, except by
parents or guardians in domestic, agricultural, or
horticultural work.  While children are observed peddling goods
and services, the practice of child labor is not widespread.

    e.  Acceptable Conditions of Work

    A 40-hour week with 8-hour days is standard, with overtime
and holiday pay at time-and-a-half and double time,
respectively.  Jamaican law requires all factories to be
registered, inspected and approved by the Ministry of Labor. 
Inspections, however, are limited by scarce resources and a
narrow legal definition of "factory."

    f.  Rights in Sectors With U.S. Investment:

    U.S. investment in Jamaica is concentrated in the
bauxite/alumina industry, petroleum products marketing, food
and related products, light manufacturing (mainly in-bond
apparel assembly), banking, tourism, data processing, and
office machine sales and distribution.  Worker rights are
respected in these sectors, and most of the firms involved are
unionized with the important exception of the garment assembly
firms.  No garment assembly firms in the free zones are
unionized and only one firm outside the free zones is
unionized.  There have been no reports of U.S.-related firms
abridging standards of acceptable working conditions.  Wages in
U.S.-owned companies generally exceed the industry average.

  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
                                                                
              Category                          Amount          

Petroleum                                               (1)
Total Manufacturing                                     168
  Food & Kindred Products                     0
  Chemicals and Allied Products             157
  Metals, Primary & Fabricated                0
  Machinery, except Electrical                0
  Electric & Electronic Equipment             0
  Transportation Equipment                    0
  Other Manufacturing                        11
Wholesale Trade                                         (1)
Banking                                                 (1)
Finance/Insurance/Real Estate                             8
Services                                                 20
Other Industries                                        (1)
TOTAL ALL INDUSTRIES                                  1,077    

(1) Suppressed to avoid disclosing data of individual companies

Source: U.S. Department of Commerce, Bureau of Economic
Analysis

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