Jamaica’s net international reserves have declined by 13.2 per cent since the start of the year, according to a JN Fund Managers note.
At the end of September, the country’s NIR stood at US$2.747 billion when compared with US$3.16 billion it reached at the end of 2019.
However, from the end of August to September, the NIR fell by less than one per cent, due mainly to a reduction in foreign assets (currency and deposits). At the same time, foreign liabilities, owed to the International Monetary Fund, also saw lessened by US$19.91 million.
At present, the JN Fund Managers note said, the current level of the NIR can pay for 36 weeks of goods and services imported — exceeding the 12-weeks benchmark.
“Over the short to medium term, the risks weighing on Jamaica’s economy remain skewed to the downside, as the resurgence of COVID-19 cases continues to impact consumer demand and business activity both locally and externally. Since much of Jamaica’s foreign exchange flows are from remittances and tourism from the United States (US), the rising unemployment levels in the US is likely to have a negative spillover effect on the Jamaican economy,” the securities dealer pointed out.
Furthermore, the institution warns that the continued surge in local COVID-19 cases could dampen the arrival of tourists to the island given there is no vaccine for the virus.
“When this is added to the uncertainties surrounding the second US stimulus plan, it further weakens our outlook for foreign exchange flows to Jamaica in at least the short term. We, therefore, anticipate that the NIR is likely to continue its declining trend in the upcoming months but will likely remain above the benchmark,” the note ended.