Both the central bank of Jamaica and the International Monetary Fund (IMF) appear to be holding fast to the policy position of continued build-up of the net international reserves against future shocks.Jamaica’s NIR has moved from US$496 million in March 1996 to US$2.65 billion as at Friday May 18, 2017. Whether or not this build-up, which targets a level of US$4 billion by the end of the current standby agreement in 2019, is having unintended effects such as an impact on the value of the Jamaican dollar, is a question which neither body appears to believe to be true.
Constant Lonkeng Ngouana, IMF Resident Representative for Jamaica, when asked by the Jamaica Observer what is the IMF’s answer to those who say that seeking to build the Net International Reserves to US$4 billion will have a negative impact on the Jamaican dollar, said the short answer to this question is “NO”.
He clarified: “The targeted level of reserves by the end of Jamaica’s Stand-By Arrangement (SBA) in 2019 referred to in this question is based on the IMF’s standard norm for Assessing the Adequacy of Reserves (ARA). The ARA metric is consistent across countries and determines for each economy the prudent level of reserves that, combined with sound policies and fundamentals, reduces the likelihood of balance-of-payments crises and provides some policy buffers.
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