ECONOMIC AND SOCIAL SURVEY JAMAICA 2010

Transcription

1 ECONOMIC AND SOCIAL SURVEY JAMAICA 2010 Hanover St. James Westmoreland Trelawny St. Ann St. Mary St. Elizabeth Portland ClarendonSt. CatherineSt. Andrew Manchester Kingston St. Thomas PREPARED BY THE PLANNING INSTITUTE OF JAMAICA

2 Pub lished by the Plan ning In sti tute of Ja maica 16 Ox ford Road Kingston 5 Ja maica W.I. Tele phone: (876) Fax: (876) info@pioj.gov.com web site: pub lished as: Eco nomic Sur vey Jamaica Pub lished by the In stitute un der its former names: Cen tral Plan ning Unit, Na tional Plan ning Agency NATIONAL LIBRARY OF JAMAICA CATALOGUING IN PUBLICATION DATA Eco nomic and So cial Sur vey Ja maica 1. Ja maica - Eco nomic con di tions Se ri als 2. So cial sur veys - Ja maica 3. Ja maica - Sta tis tics I. Plan ning In sti tute of Ja maica ISSN Ec onomic and so cial sur vey - Ja maica Com piled and type set by the Cor po rate Affairs, Marketing and Communications Division of the Plan ning In sti tute of Ja maica Printed by Ja maica Print ing Serv ices Ltd. Copy right 2011 by Plan ning In sti tute of Ja maica All rights re served Pub lished April, 2011 An nual sub scrip tion Ja maica: J$ USA, Can ada and the Car ib bean Area: US$70.00 Air mail UK and the Rest of the World: US$

3 Ta ble of Con tents OVER VIEW THE IN TER NA TIONAL ECON OMY OF FI CIAL DE VEL OP MENT AS SIS TANCE SUSTAINABLE DEVELOPMENT Sus tain able De vel op ment Sci ence, Tech nol ogy and Innovation THE MACRO ECON OMY Gross Do mes tic Prod uct Bal ance of Pay ments and Ex ter nal Trade Money and In fla tion Fiscal Accounts Finance & Insurance Services SEC TO RAL PER FORM ANCE Agriculture Min ing and Quar ry ing Manufacture Mi cro and Small Enterprises Con struc tion Energy, Electricity and Water Trans port, Stor age and Com mu ni ca tion Tour ism En ter tain ment and Sports Whole sale & Re tail Trade; Re pair and In stal la tion of Machinery DEMO GRAPH ICS AND THE LA BOUR MAR KET Popu la tion The La bour Mar ket HU MAN DE VEL OP MENT, WEL FARE AND CUL TURE Edu ca tion and Train ing Health National Security and Justice So cial De vel op ment, So cial Pro tec tion and Culture LIST OF TA BLES LIST OF FIG URES AC RO NYMS GLOS SARY OF TERMS IN DEX

4 FORE WORD The Eco nomic and So cial Sur vey Ja maica (ESSJ), in this its 53 rd year, con tin ues to re main rel e vant. The doc u - ment is highly re garded as a cred i ble source of data on the coun - try s eco nomic, so cial and en vi ron men tal is sues as well as on external cooperation management. The doc u ment com prises 25 chap ters cap tur ing de tailed anal y sis un der seven ma jor head ings: The In ter na tional Econ - omy; Official Development Assistance; Sustainable Development; the Macro Econ omy; Sec toral Per for mance; De mo - graph ics and the La bour Mar ket; and Hu man De vel op ment, Wel fare and Cul ture. Reader friendly fea tures of the doc u ment in clude an over view which sum ma rizes the main find ings con - tained in the re port; a glos sary; an in dex; a list of ac ro nyms; charts; pho to graphs and a tab u lar sum mary of se lected eco - nomic, so cial and en vi ron men tal data for easy and quick ref er - ence. ESSJ 2010 doc u ments the chal lenges faced by the Ja mai can so ci ety as it strove to re cover from the wan ing im - pact of the global re ces sion, the ef fects of a se vere drought in the first four months of the year, some dis lo ca tion from the se - cu rity op er a tions un der taken in May and the pas sage of Trop i - cal Storm Nicole in Sep tem ber. It also shows the econ omy reg - is ter ing some signs of sta bil ity re flected in the pass ing of quar - terly tests un der the In ter na tional Mon e tary Fund Stand-by Ar - rangement. Dur ing Fis cal Year 2010/11, the In sti tute s press brief ings gave ded i cated fo cus to the no tion of eco nomic well-be ing as the cen tral com po nent of socio-eco nomic de vel op ment. This was done through the pub li ca tion and dis cus sion of var i ous as - pects of the dash board of in di ca tors de signed to track prog ress un der Vi sion 2030 Ja maica - Na tional Development Plan. Similarly, in ESSJ 2010, we have pro vided an up date on the implementation of Vi sion 2030 Ja maica in line with a com - mit ment made to our read ers in The PIOJ will re lease a Growth In duce ment Strat egy for Ja maica in the Short and Me dium Term in March 2011 and will host a pub lic Sym po sium on this is sue on March 15, This Growth In duce ment Strat egy will be fully aligned with Vi sion 2030 Ja maica and the Me dium Term Eco nomic and Policy Framework ap proved by Par lia ment in In fu ture edi tions of the ESSJ, the PIOJ ex pects to re port on its im ple - mentation. We do hope that our var i ous stake holders will find this edi - tion of the ESSJ cur rent, in for ma tive and com pre hen sive in its re port ing of events in Glad stone Hutch in son, PhD. Di rec tor Gen eral Plan ning In sti tute of Ja maica AC KNOW LEDGEMENTS TTo pro duce the Eco nomic and So cial Sur vey Ja maica is truly a col lab o ra tive pro cess, as with out our data sources, the ESSJ could not be pro duced. The man age ment and staff of the PIOJ, there fore, take great plea sure in ex press ing our ap pre ci a tion to all our data sup pli ers. Within the pub lic sec tor, we would like to rec og nize the Sta tis ti cal In sti tute of Ja maica; the Bank of Ja maica; and the Min is try of Fi nance and the Pub lic Ser vice who are our pri mary data pro vid ers. In ad di tion, we would like to ex press ap - pre ci a tion to all Gov ern ment Min is tries, De part ments and Agen - cies; Institutes, Councils; Non-Governmental Organizations; Commodity Boards; Authorities; Commissions; Councils; and Government primary, secondary and tertiary institutions. With re gard to the pri vate sec tor data sup pli ers, we ac knowl - edge, among oth ers, the sup port of the Ja maica Ex port ers As so ci a - tion; the Jamaica Manufacturers Association; the Jamaica Chamber of Com merce; the Ja maica Busi ness De vel op ment Cen tre; pri - vate secondary and tertiary educational institutions; the Jamaica Public Service Company Limited; the Financial Services sector; private sector companies; the hotel sector; Embassies and High Com mis sions. We would be re miss if we did not com mend the tre men - dous work of our own staff. Thanks to the chap ter writ ers with out whom there would be no doc u ment. Thanks to the ed i tors and desk top pub lish ers who en sure that the qual ity of the doc u ment is main tained or im proved where pos si ble. Thanks also to the ad min is tra tive staff the li brary staff, sec re tar ies, pho to copi ers and driv ers. Fi nally, we can not for get to ex press our pro found grat i - tude to the staff of the Ja maica Print ing Ser vices Lim ited who have over a num ber of years en sured the timely de liv ery of the ESSJ.

5 I I SELECTED INDICATORS Unit GDP at Cur rent Mar ket Prices $b r 783.6r r r r p GDP in Ba sic Value at Cur rent Prices $b r r r r p GDP in Ba sic Value at Con stant (2003) Prices $b r r r r r p Growth in GDP in Ba sic Value at Con stant (2003) Prices % r r -1.2 p Goods Pro duc tion as % of To tal Real GDP % r r 23.6 Ag ri cul ture " % 4.8 r 5.4 r 5.0 r Min ing & Quar ry ing " % 4.1 r 4.1 r 3.9 r Man u fac ture " % 9.1 r 8.6 r 8.5 r Con struc tion " % 8.8 r 8.4 r 8.7 r Ser vices " % 78.4 r 78.6r 79.1r Ba sic Ser vices " % 15.2 r 15.5 r 15.7 r 15.6 r Elec tric ity & Wa ter " % 3.4 r 3.4 r 3.3 r Trans port, Stor age & Com mu ni ca tion " % 11.9 r r To tal Other Ser vices " % 63.1 r 63.1 r 63.5 r 64.4 r Fi nan cial In ter me di a tion Ser vices In di rectly Mea - sured % 5.2 r 5.1 r 5.3 r Ex ports as % GDP (cur rent) % r Im ports " % GDP per ca pita Cur rent $' r Con stant $' r Con sumer Price In dex (CPI)(end Dec.) Inflation : Dec./Dec. % : An nual Avg Im plicit GDP De fla tor, 2003 = 1.00 a 1.25 r 1.36 r 1.51 r 1.74 r 1.94 r 2.1 Changes in Im plicit De fla tor % r 15.2 r 11.1 r 8.5 Avg. Wtd. Comm. Bank Loan Rate % Avg. Wtd. Comm. Bank De posit Rate % Avg. Trea sury Bill Yield (6 Mths Instr.) % Ja. Stock Ex change In dex (end Dec.) Points Stock Mar ket Capitalisation $b M1 $b r % Change % M2 $b r % Change % b c To tal Rev e nue $b Recurrent Revenue $b To tal Ex pen di ture $b Re cur rent Ex pen di ture $b Cap i tal Ex pen di ture $b Debt Servicing $b Sur plus/def i cit $b To tal Rev e nue as a % of GDP % n/a Re cur rent Rev e nue " % n/a Re cur rent Ex pen di ture " % n/a To tal Ex pen di ture (ex clud ing Am or ti sa tion) " % n/a

6 II II Unit Sur plus/def i cit " % n/a Debt Ser vic ing " % n/a EXTERNAL TRADE To tal Im ports (c.i.f.) US$ m An nual Growth In To tal Im ports % Con sumer Goods (excl. Mo tor Cars) US$ m n/a n/a n/a n/a Raw Material/Intermediate Goods US$ m n/a n/a n/a n/a Cap i tal goods (excl. Mo tor Cars) US$ m n/a n/a n/a n/a 'Pas sen ger Mo tor Cars US$ m n/a n/a n/a n/a Total Exports (f.o.b.) US$ m An nual Growth In To tal Ex ports % Tra di tional Ex ports US$ m r Baux ite US$ m r Alu mina US$ m r Sugar US$ m Ba nana US$ m Non Tra di tional Ex ports US$ m r Wear ing Ap parel US$ m r Trade Bal ance US$ m r BAL ANCE OF PAY MENTS Cur rent Ac count Bal ance US$ m Goods Bal ance US$ m To tal Im ports US$ m r To tal Ex ports US$ m r Ser vices (Net) US$ m Bal ance on Goods And Ser vices US$ m In come (Net) US$ m Cur rent Trans fers (Net) US$ m Capital & Financial Account Balance US$ m Re serves (Mi nus=in crease) US$ m Pri vate Re mit tance In flows US$ m Net International Reserves US$ m Net For eign As sets $b r Nom i nal Ex change Rate ($ per US$1.00) Av er age An nual $ To tal Vis i tor Ar riv als Mil lion Stop-over Vis i tors Mil lion Cruise Pas sen gers Mil lion Oc cu pancy Rates r % n/a n/a For eign Ex change Earn ings US$m Energy Pe tro leum Im ports d mb 25.3 r 27.1 r r 18.6 Elec tric ity Gen er ated GWh Pop u la tion '000 per sons p Growth Rate % Crude Birth Rate per 1000 pop Crude Death Rate per 1000 pop Nat u ral In crease % To tal Fer til ity Rate % p Net Ex ter nal Move ment '000 per sons r r r La bour Force ' r p

7 III III Unit Male ' r p Fe male ' r p La bour Force Par tic i pa tion Rate % p Male % p Fe male % p To tal Em ploy ment ' r p Male ' r p Fe male ' r p To tal Un em ploy ment Rate % p Male % p Fe male % p Av er age Weekly Earn ings of All Em ploy ees(1990 $) e $ p Ed u ca tion En rol ment in : ('000) Pri mary In sti tu tions " Sec ond ary In sti tu tions " Ter tiary In sti tu tions % r 32.8 Uni ver sity f " Lit er acy Rate g " r Training To tal out put of Tech ni cal, Man a ge rial & Re lated Man power To tal out put of Skilled and Semi- skilled h Man power ('000 ) " Health In fant Mor tal ity Rate per '000 live births Per cent age Beds Oc cu pancy % Immunization (National Average): % - DPT, OPV, BCG (0-11 months) % MMR (12-23 months) % Ac cess to Safe Wa ter % n/a n/a San i tary Fa cil ity % n/a n/a Life Ex pec tancy (at birth) yrs Ma ter nal Mor tal ity per Na tional Se cu rity Over all Crime Rate per n/a n/a n/a Ma jor Crime Rate " Murder Rate " En vi ron men tal Rate of deforestation (%) % En ergy Con sump tion per ca pita (BOE) Al ter na tive En ergy ('000) (BOE) r 362 r 966 p 948 Per capita domestic water consumption Megalitres p An nual Rain fall (mm) mm 2426 r 1665 r 2139 r 1960 r 1566 r 2272 Avg. An nual Tem per a ture Cel sius r 26.3 p n/a % pop u la tion in ur ban ar eas Per Capita Waste generation (kg/day) n/a 1.5 r 0.74 r * 0.86 Sci ence, Tech nol ogy & In no va tion Fixed line pen e tra tion (%) p 10.7 p Mo bile Pen e tra tion (%) p p Broad band Pen e tra tion (%) EIU E-readi ness rank ing 41 of 65 j 43 of of of of of 70 Res i dent pat ent fil ings

8 IV IV Notes : a -The Im plicit De fla tor, an in dex of av er age prices, is cal cu lated as the ra tio of GDP at cur rent prices to GDP at contant prices. b - Rev e nue and Ex pen di ture Fig ures are for the fis cal years 2005/ /10 c - Fis cal Data for 2008 rep re sent April Jan u ary 2011 d - Ex clud ing mar ket ing com pa nies e - From Sur vey of Em ploy ment, Earn ings and Hours Worked in Large Es tab lish ments, Sta tis ti cal In sti tute of Ja maica. f - En rol ment data for Uni ver sity in clude data for These in clude Uni ver sity Col lege of the Ca rib bean and North ern Ca rib bean Uni ver sity; Data for 2010 in clude Uni ver sity Col lege of the Ca rib bean, North ern Ca rib bean Uni ver sity, Uni ver sity of the West In dies, Uni ver sity of Tech nol ogy, In ter na tional Uni ver sity of the Ca rib bean and MICO Uni ver sity g - Fig ure for 2005 was based on Ja maica Lit er acy Sur vey 1999; Fig ure for was based on UNESCO es ti mates; Fig ure for 2010 is based on the Lit er - acy Mod ule of the Ja maica Sur vey of Liv ing Con di tions h - Par tial data re ceived in 2007 i - Data from the two larg est wastesheds for De cem ber 2009 are not in cluded j - To tal num ber of coun tries in rank ing mb - mil lion bar rels p - pro vi sional n/a - not avail able r - re vised BOE- Bar rel of Oil Equiv a lent

9 OVERVIEW INTRODUCTION Dur ing 2010 the Ja mai can econ omy and so ci ety were im - pacted by sev eral global and do mes tic de vel op ments which in flu enced the out turn of key de vel op men tal in di ca tors. The econ omy was neg a tively af fected by the lin ger ing ef fects of the global eco nomic cri sis, par tic u larly through weak ex ter nal de - mand and pri vate fi nan cial flows. The de te ri o ra tion in the Cur rent Ac counts of the Bal ance of Pay ments re sulted in the Gov ern ment of Ja maica (GOJ) en ter ing into a bor row ing ar range ment with the In ter na tional Mon e tary Fund through the sign ing of a 27 month Stand-By Ar range ment in Feb ru ary In or der to com plete the sign ing of the Stand-By Ar range ment by the IMF, the GOJ was required to complete three prior actions, namely: the im ple men ta tion of a tax pack age aimed at yield ing ap prox i mately 2.0 per cent of GDP the im ple men ta tion of the Ja maica Debt Ex change (JDX) programme which in volved the vol un tary ex - change of ex ist ing do mes tic bonds for new bonds at lower in ter est rates and lon ger ma tu ri ties. This was ex - pected to yield $40.0 bil lion in sav ings in interest payments, the ini ti a tion of the pro cess to di vest the Air Ja maica. A limited State of Emergency which occurred between May and June in sections of Western Kingston, St. Catherine and Clarendon also impacted the performance of the economy during the year. Several industries including Wholesale & Retail Trade, Manufacture and Tourism were adversely affected by the temporary closure of businesses and the travel advisories issued by Jamaica s major tourist source markets. The total impact of these Events in the Western Kingston on the economy 1 was estimated at $22.5 billion or 2.1 per cent of total GDP for Total damage and losses incurred by productive sector amounted to $20.9 billion and accounted for approximately 93.0 per cent of the total. The tourism industry accounted for the largest share of the total losses at $20.0 billion of 88.9 per cent. In September, the country was affected by Tropical Depression No. 16 and rains associated with Tropical Storm Nicole which caused total damage and losses valued at $20.5 billion or 1.9 per cent of 2009 GDP. The impact of the rains was largely concentrated on infrastructural damage to roads, drains and bridges (94.1 per cent of the total). The productive sectors recorded total damage and losses of $763.0 million of which the Agriculture industry accounted for $531.6 or 69.7 per cent. Real GDP was estimated at $ million, representing a decline of 1.2 per cent for This out-turn was largely attributed to the adverse impact of the various challenges experienced during the year, however, it represents a deceleration in the rate of decline compared with the 3.0 per cent recorded in Both the Goods-Producing and the Service Industries recorded declines of 1.7 per cent and 1.5 per cent, respectively. The rate of inflation for 2010 was 11.7 per cent, largely reflecting higher food prices associated with drought conditions in the first quarter as well as the passage Tropical Storm Nicole. The employed labour force declined by 2.7 per cent to an average of persons, with males continuing to represent the majority at 56.9 per cent. This resulted in an increase in the unemployment rate by 1.0 percentage point to 12.4 per cent. This outturn was attributed to the contraction in economic activities. Despite the challenges which were reflected in the overall negative out-turn of several economic indicators related to production and prices, there were signs of improvements in other indicators and progress was made in the implementation of policies and programmes aimed at ensuring greater stabilization and sustained progress going forward. Notably, there was progress in the implementation of the country s first long-term strategic plan, Vision 2030 Jamaica - National Development Plan (Vision 2030 Jamaica); and the Medium Term Socio-Economic Policy Framework (MTF) (which identifies the intermediate steps towards the realization of Vision 2030 Jamaica) which were tabled in Parliament during the 2009/2010 Budget Debate, continued during Major activities included: (a) mainstreaming of Vision 2030 Jamaica in the public sector; (b) progress towards establishment of a robust Monitoring and Evaluation System and an institutional framework for Vision 2030 Jamaica; and communication and advocacy for Vision 2030 Jamaica. In 2010 new Official Development Assistance (ODA) by multilateral and bilateral partners amounted to US$1.1 billion ($98.2 billion), a decline of 4.7 per cent. ODA assistance continued to support Jamaica s development priorities outlined in the Medium Term Economic Framework geared at maintaining macroeconomic stability, promoting social well-being, and fostering an enabling environment for private sector development. Central Government operations between April and December 2010 generated a fiscal deficit of $56.0 billion, 1 UN ECLAC Re port on the Macro Socio-Eco nomic Ef fects of the Events in West ern Kingston Area

10 VII VII which was $8.2 billion lower than budgeted. This was due to the net effect of lower than planned Expenditure of $12.3 billion and lower than budgeted Revenue & Grants of $4.0 billion. The Current Account deficit amounted to US$991.5 million, representing an improvement of US$136.0 million. All sub-accounts with the exception of the Goods sub-account improved. The Goods sub-account deteriorated by US$171.1 million to US$ million, reflecting a US$153.8 million increase in imports and a US$17.4 million decline in exports. Total remittance inflows amounted to US$ million, an increase of 6.5 per cent. The Gross International Reserves at the end of the year was US$ million or 23.2 weeks of goods and services imports and was buffered by increased flows from the IMF, the Inter-American Development Bank (IDB), the Caribbean Development Bank (CDB) and grant funding from the European Union (EU). The Education and Training sectors continued to focus on creating access, improving student and teacher performance, and enhancing school management. Approximately school spaces were created at primary schools as well as an expansion of access at the tertiary level through the development of satellite campuses and the establishment of online programmes and weekend colleges. Other initiatives to improve student and teacher performance and to achieve universal literacy were implemented. Social welfare pogrammes were expanded to better address the needs of the more economically vulnerable groups particularly as a result of the impact of the global economic recession on the poor and vulnerable in society. The development of policies to protect children and adolescents was also given priority during the year. VI SION 2030 JAMAICA NA TIONAL DE VEL OP MENT PLAN The country s first long-term strategic plan, Vision 2030 Jamaica - National Development Plan, entered its second year of implementation during The Plan, which sets out the country s national vision statement: Jamaica, the place of choice to live, work, raise families, and do business, provides a comprehensive framework in which the economic, social, environmental and governance aspects of national development are integrated, and is expected to put Jamaica in a position to achieve developed country status by The first Medium Term Socio-Economic Policy Framework (MTF) which covers the three- year period FY2009/ /12 outlines realistic, specific, high priority national outcomes and targets towards the longer-term goals contained in the Plan. The National Development Plan represents an integration of 29 sector plans prepared by the Task Forces that were in operation from 2007 to The development of these strategic documents was based on two and a half years of planning, consultations and preparation led by the Planning Institute of Jamaica (PIOJ) and included broad-based participation from all sectors of society government, private sector, community based organizations, academia, individual citizens of Jamaica and the international development community. During 2010 progress continued in the implementation of the Plan, including: Mainstreaming of Vi sion 2030 Ja maica in the Pub lic Sec tor In keeping with the Cabinet Decision 20/09 which directed Ministries, Departments and Agencies (MDAs) to align their corporate and operational plans with Vision 2030 Jamaica and the MTF, the PIOJ as the National Focal Point for Vision 2030 Jamaica has carried out ongoing meetings with MDAs to facilitate the mainstreaming of the Plan in the public sector. These consultations have resulted in: align ment of the cor po rate and op er a tional plans of MDAs with Vi sion 2030 Ja maica and the MTF align ment of key na tional pol i cies and strat e gies with Vi sion 2030 Ja maica in clud ing Ja maica s Na tional En ergy Pol icy and the Na - tional Ex port Strategy the re vi sion and final is ation of per for mance in di - ca tors and tar gets for key MDAs in clud ing the ministries of National Security, Justice, Educa - tion, En ergy and Min ing, Health, and La bour and Social Security pre lim i nary as sess ment of the ca pac ity to pro vide in for ma tion and data/sta tis tics for mon i tor ing of im ple men ta tion prog ress and track ing of indicators prog ress to ward agree ment on co or di na tion and re port ing re quire ments. Key advances in the institutionalization of Vision 2030 Jamaica were achieved during These included: The new Strategic Business Plan templates being introduced by the Cabinet Office in FY 2011/12 for eight pilot ministries under the phased establishment of the Performance Monitoring and Evaluation System (PMES) in the public sector that require the explicit alignment of the three year plans and budgets for each pilot ministry with the goals and outcomes of Vision 2030 Jamaica (see also below). The PIOJ has worked closely with the Public Sector Transformation Unit (PSTU) and the Cabinet Office in developing frameworks for the alignment with Vision 2030 Jamaica of the plans and budgets of twelve (12) public sector agencies slated for devolution in FY 2011/12. These alignment frameworks also will serve as templates for future devolutions of public sector agencies. Establishment of a robust Monitoring and Evaluation System and institutional framework for Vi sion 2030 Ja maica The Vision 2030 Jamaica monitoring and evaluation framework is being built on existing systems and processes within the public sector. The PIOJ continues to participate in high-level meetings among key agencies including the Office of the Prime Minister (OPM), the Cabinet Office and the Ministry of Finance and the Public Service (MFPS) to ensure the integration of Vision 2030 Jamaica with proposed and existing national and sectoral processes and mechanisms for planning, budgeting, monitoring and evaluation in the public sector. A joint committee with representatives from the Cabinet Office, MFPS, PIOJ, Auditor General s Department and the Ministry of Transport and Works was established in October 2010 to coordinate the introduction of the Performance Monitoring and Evaluation System (PMES) in the public sector and the new Medium Term Expenditure Framework (MTEF) being introduced in six pilot ministries in FY 2011/2012 to provide a rolling three-year budget for the public sector. The criteria

11 VIII VIII for selection of capital projects under the Jamaica Public Investment Prioritization System which were finalized in 2010 are explicitly aligned with the priority national outcomes of Vision 2030 Jamaica and the MTF, and have been applied in the preparation of the fiscal budgets of the six pilot ministries of the MTEF for FY 2011/12. The overall expected outcome is an integrated national framework for monitoring and evaluation which is fully aligned to Vision 2030 Jamaica, and which is consistent with current public sector transformation efforts and the Government s commitment to Results-Based Management (RBM) as articulated in the Medium Term Action Plan (MTAP). The PIOJ continued to facilitate the establishment and operation of Thematic Working Groups (TWGs), whose membership is drawn from the public and private sectors, civil society and International Development Partners as part of the monitoring and evaluation framework for each of the main sectors and outcome areas under Vision 2030 Jamaica. Approximately 18 TWGs will be established and each will meet at least once per quarter. TWGs provide a dynamic mechanism to plan, implement, monitor, and evaluate strategic priorities and actions; track indicator progress; identify and mobilize resources for the sector or thematic area; promote new policies and projects; and share information, knowledge and expertise. The development of the monitoring and evaluation framework received support from two study tours to Jamaica one by a team from Trinidad and Tobago in April 2010, including representatives from the Trinidad and Tobago Vision 2020 Programme Management Office (PMO), and the other by the Institute of Applied Economic Research (IPEA) from Brazil in June The tours focused primarily on sharing relevant experiences, challenges and best practices as well as exploring opportunities for further collaboration between Jamaica and these countries. Follow-up training in Results-Based Management (RBM) for key public sector staff is planned for FY 2011/2012. A National Dashboard of Indicators was developed and introduced to track progress towards achievement of the national goals of Vision 2030 Jamaica as a holistic and integrated measure of national development and social well-being. The following eight areas of measurement are now reported on by the PIOJ on a quarterly basis as an integral part of its Quarterly Press Briefings on Economic Performance: 1. Health Sta tus 2. Ed u ca tion Sta tus 3. La bour Force Qual ity 4. Security Status 5. Justice Status 6. Eco nomic Growth 7. Em ploy ment 8. En vi ron men tal Stew ard ship Sta tus Communication and Advocacy A range of activities was undertaken to support the communication and advocacy programme for Vision 2030 Jamaica. These include media publicity, preparation of promotional documents such as brochures, and the production and electronic distribution of the quarterly newsletter Vision 2030 Jamaica Update. The communications strategy also focuses on partnering with various organizations to infuse Vision 2030 Jamaica into various events and activities related to national development for example, the Ministry of Education, Social Development Commission (SDC), Jamaica Cultural Development Commission (JCDC) and National Transformation Unit, OPM to create greater understanding and buy-in of Vision 2030 Jamaica. The PIOJ also was a key partner with the Department of Local Government in their island-wide consultations and visioning for the development of parish development plans during February-March The main activities included: prep a ra tion and print ing of cop ies of the Vi sion 2030 Ja maica, Pop u lar Ver sion for dis tri - bu tion to a wide cross-sec tion of stake holders through out Ja maica and over seas, and official launch of the doc u ment by the Prime Min is ter on Oc to ber 8, 2010 in Montego Bay. The launch fol - lowed by an ex ten sive dis tri bu tion programme, in clud ing dis tri bu tion of cop ies to the Ministry of Education for use in the Citizenship Ed u ca tion Programme in schools, dis tri bu tion of over 500 cop ies to the Ja maica In de pend ent Schools As so ci a tion, and dis tri bu tion of 500 cop ies to the Ja maica Li brary Ser vice to be avail - able in pub lic li brar ies, book mo biles, as well as li brar ies in pris ons and pub lic hos pi tals islandwide. collaboration with the So cial De vel op ment Com - mis sion (SDC) in host ing a se ries of 16 Trainer of Trainers Work shops in ev ery par ish islandwide over the pe riod No vem ber 2010 Feb ru ary 2011 to train SDC staff and com mu nity group leaders in us ing the Pop u lar Ver sion to ap ply the Plan to de vel op ment plan ning at the par ish and com mu - nity lev els. Other activities completed during the period to support the communication programme for Vision 2030 Jamaica included: the dis tri bu tion of cop ies of the Plan, 976 cop ies of MTF , and 1,043 CDs con - tain ing the Plan and MTF, as well as cop ies of var - i ous Sec tor Plans to key stake holders, in clud ing the Gov er nor Gen eral and im me di ate past Gov er - nor General, Prime Minister, parliamentarians, Op po si tion Leader and mem bers of the Shadow Cabinet, two former Prime Ministers, Ministries, Departments and Agencies, private sector enti - ties, schools, libraries and civil society groups on go ing main te nance and de vel op ment of the Vi - sion 2030 Ja maica Website which fea tures news and activities, resources and publications related to the Plan plan ning with JCDC to in cor po rate Vi sion 2030 Ja maica into the ac tiv i ties of Ja maica Fes ti val 2011 and 2012, in clud ing pre sen ta tions to the 2011 re gional Per form ing Arts plan ning work - shops in No vem ber-de cem ber 2010, and a pro - posal by the PIOJ for tro phy and cash awards for pre sen ta tions in var i ous cat e go ries of the per - form ing arts, Fes ti val Queen and Fes ti val Song Con tests, that best ex em plify Vi sion 2030 Ja - maica at the parish and national levels.

12 IX IX INTERNATIONAL ECONOMY The global economy grew by 5.0 per cent during 2010, reflecting recovery from the 2008/2009 global financial and economic crisis. Growth was pushed mainly by the 7.1 per cent increase in real gross domestic product of Emerging Market & Developing Countries, led by China. Output of Advanced Countries grew by 3.0 per cent. Global trade and investment levels expanded by 12.0 per cent and 0.7 per cent to US$18.3 trillion and US$1.12 trillion, respectively. The rate of improvement, was however, stymied by the decline in government incentives and the Euro zone financial crisis and the threat of contagion to other countries. Global prices increased reflecting higher food, energy and transportation costs. Inflation in Advanced Economies averaged 1.4 per cent, while for Emerging & Developing Countries there was a 6.2 per cent increase in inflation. Contributing to this out-turn was the movement in commodity prices which rebounded, due in part to increased demand and financial leveraging, weather-induced shocks, lower inventories and trade restrictions. The WTO continued efforts to settle unresolved issues related to the Doha Development Round. Caribbean trade policy continued to focus on the implementation of the ACP/EU Economic Partnership Agreement with the joint establishment of committees to monitor the implementation of commitments under the Agreement. Work also continued on preparations for the establishment of a free trade area between CARICOM and Canada. OFFICIAL DEVELOPMENT ASSISTANCE Multilateral and bilateral partners, through Official Development Assistance (ODA), continued to support Jamaica s development priorities as outlined in the Medium Term Socio-Economic Policy Framework. The assistance was critical in maintaining macroeconomic stability, promoting social well-being, and fostering an enabling environment for private sector development. New ODA in 2010 was US$1.1 billion ($98.2 billion), a decrease of 4.7 per cent relative to 2009, and reflected the net effect of variations in the levels of commitments among the International Development Partners (IDPs). Newly approved projects and programmes by Multilateral Financial Institutions (MFIs) and Multilateral Technical Cooperation agencies increased by 50.2 per cent and 30.2 per cent, respectively, while new approvals from bilateral sources decreased by 63.3 per cent. New ODA was directed primarily at the Administrative sector which accounted for US$858.0 million ($75.0 billion), much of which was utilized to support the Government s budgetary requirements. The Economic Infrastructure, Social Infrastructure and Directly Productive sectors accounted for US$163.7 million ($14.3 billion), US$77.0 million ($6.7 billion) and US$24.7 million ($2.2 billion), respectively. Seventy-six per cent of new ODA was approved as budget support, the conditionalities of which were generally aligned with the government s policies. Key elements of the government s reform agenda were supported as it relates to education transformation, national security, justice, competitiveness, and fiscal management, including fiscal responsibility, debt management and tax reform. Total ODA disbursements increased by per cent to US$1.3 billion ($110.7 billion) compared with Loan disbursements were US$1.1 billion ($96.1 billion) reflecting a per cent increase, while grant disbursements were US$167.7 million ($14.7 billion) representing a 9.7 per cent increase. The increase in loan disbursements was mainly due to the release of the six policy-based loans by the Inter-American Development Bank (IDB), a development policy loan from the World Bank and a policy-based loan from the Caribbean Development Bank. Net flows between Jamaica and its three major development financing agencies was US$755.8 million ($66.0 billion), an increase of per cent compared with Total repayment of principal, interest and other charges decreased by 19.8 per cent to US$155.7 million ($13.6 billion), while disbursements to ongoing projects and programmes totalled US$911.5 million ($79.6 billion), an increase of per cent compared with The conclusion of a Stand-By Arrangement (SBA) with the International Monetary Fund in February facilitated approvals of new budget support resources from MFIs. The IDB and the World Bank, in particular, had delayed committing new resources for budget support in 2009 pending the conclusion of negotiations for the SBA. SUSTAINABLE DEVELOPMENT & SCIENCE, TECHNOLOGY AND INNOVATION SUS TAIN ABLE DE VEL OP MENT The sustainable development (SD) landscape was characterized by progress in key sectors. The country benefitted from the implementation of activities to strengthen disaster risk reduction and climate change resilience. Chief among these was the development of disaster management plans and community hazard maps for 56 communities. In the area of climate change adaptation, activities included the development of a number of projects, namely: the financing proposal to access resources for the Pilot Program for Climate Resilience (PPCR); and the Climate Change Adaptation and Disaster Risk Reduction Project. Another boost to climate change adaptation efforts came with the accreditation of the PIOJ as a National Implementing Entity of the Adaption Fund Board. Improvement in land management and the development approvals process was facilitated through the implementation of Phase II of the web-based Application Management Data Automation (AMANDA) system to track development applications; roll-out of Phase II of the Land Administration and Management Project (LAMP); and establishment of a Development Assistance Centre (DAC) within the National Environment and Planning Agency (NEPA). Activities to safeguard the island s ecosystems and natural resources were highlighted by assessments of mangrove forest over the period , the results of which recorded declines in mangrove forest cover in four of the six parishes assessed. Other activities of significance included reforestation efforts, with the planting of hectares of forests; monitoring of 22 coral reef sites; modelling of an aquifer vulnerability map of the island; and an assessment of water resources of the Alluvial Aquifer of the Yallahs River Watershed Management Unit. The island suffered significantly from the impact of both natural and man-made disasters which led to losses in lives and property. Rains from Tropical Depression No. 16 and Tropical Storm Nicole caused damage and losses island wide with Hanover, Clarendon, Kingston and St. Andrew, Westmoreland, St. Catherine and St. Elizabeth experiencing

13 X X the most severe impact. The event resulted in the death of 16 persons and significant damage and losses. In terms of man-made disasters, the May 22 June 7 events in Western Kingston resulted in the loss of 76 lives. Overall, there were genuine fire calls island-wide which directly impacted persons - 46 deaths, 73 injured, and rendered homeless. The growth in application of Geographic Information Systems (GIS) continued as evidenced by the increased use of internet-based GIS applications to support business processes of both government and private sector organizations and to facilitate access to critical spatial data by the general public. SCIENCE, TECHNOLOGY AND INNOVATION Jamaica maintained its drive towards developing a technology enabled society by the ongoing building of capacity in science, technology and innovation (STI) in line with Vision 2030 Jamaica - National Development Plan. The continued expansion of the Information and Communications Technology (ICT) infrastructure facilitated advancement in E-services in the public and private sectors and the introduction of Fourth Generation wireless technology across the telecommunications market. As at June 2010, Jamaica s teledensity was 126.9/100 population which reflected the continued improvement of the ICT infrastructure. The high teledensity was largely attributed to the high mobile penetration rate which rose to per cent between December 2009 and June Initiatives to diversify the energy base, develop renewable energy, and improve energy efficiency and conservation were sustained with the expansion of the Wigton Windfarm by 18 MW to a total of 38.7 MW, and the commissioning of a four MW windfarm at Munro, St. Elizabeth. In addition, strengthening of the policy framework for energy efficiency and diversification progressed with the completion of the drafts of five sub-policies. In order to improve the quality of Jamaican products and promote environmental compliance, 14 international standards from the International Organization for Standardization (ISO) series 2 of environmental standards were adopted and two national standards were promulgated. In addition, 17 Caribbean Community (CARICOM) standards were adopted. Also, 22 local companies were certified 9001: and 13 were granted ISO 14001:2004 certification. The country also made strides in increasing the number of students exposed to science-related disciplines as well as in expanding and diversifying some undergraduate and graduate STI programmes offered at the tertiary level. The use of research and development (R&D) to enhance crop and livestock production, improve health and ensure quality and safety of food was sustained. THE ECON OMY MACROECONOMIC POLICIES AND PERFORMANCE During 2010 Jamaica s medium term economic policy framework was guided by several conditionalities established under a 27-month Stand-By Arrangement (SBA) with the International Monetary Fund (IMF). An initial step towards this SBA entailed the completion of three prior actions performance criteria which were: the im ple men ta tion of a tax pol icy pack age by De cem ber 2009 aimed at yield ing rev e nue amount ing to ap prox i mately 2.0 per cent of GDP. the im ple men ta tion of a debt ex change programme by Jan u ary On Jan u ary 14, 2010 the Ja maica Debt Ex change (JDX) Programme was launched. The JDX in volved a vol un tary ex change of ex ist ing do mes tic bonds 4 for new bonds of the same prin ci pal value, but which have lower in ter est rates and lon ger ma tu - ri ties. The $700 mil lion JDX programme is ex - pected to yield in ter est sav ings to the Gov ern - ment of Jamaica of up to $40.0 billion. The initiation of plans for the divestment or liquidation of the national airline, Air Jamaica. As a result of the successful completion of these prior actions 5, the Board of Governors of the IMF approved Jamaica s application on February 4, The SBA entails meeting quarterly performance targets which are linked to disbursements of quarterly tranches by the IMF. The targets for FY 2010/11 were: a re duc tion in the fis cal def i cit to a pro jected 6.5 per cent of GDP eco nomic growth of 0.5 per cent in fla tion be tween the range of 7.5 per cent and 9.5 per cent; a re duc tion in the in ter est bill nar row ing of the cur rent ac count def i cit to ap - prox i mately 9.0 per cent in FY 2010/11 gross for eign re serves equiv a lent to 16 weeks of goods and ser vices. The Letter of Intent to the IMF was accompanied by a Memorandum of Economic and Financial Policies (MEFP). The MEFP outlined the macroeconomic and structural policies and programmes the government intended to undertake in addressing the economic problems of the country. The IMF programme would be monitored on a quarterly basis through quantitative performance criteria, indicative targets and structural benchmarks. 2 A number of standards were developed by the International Organization for Standardization (ISO) to help organizations and companies comply with environmental standards. 3 International standard that is aimed at helping organizations produce high quality products satisfactorily to consumers. 4 Excluding Treasury Bills 5 The JDX programe had a 99.2 per cent success rate for eligible securities.

14 XI XI Disbursements would be dependent on the achievement of stated quantitative targets and progress made on key structural reforms. As a consequence, the macroeconomic policy framework of the Government of Jamaica (GOJ) was guided by the MEFP. The main objectives of the GOJ s MEFP for FY2009/10 FY2013/14 were: a debt man age ment strat egy that will re duce the debt ser vic ing costs the de vel op ment of a fis cal con sol i da tion strat egy aimed at stream lin ing ex pen di ture and re form ing the pub lic sec tor, in clud ing the di vest ment of some non-core public bodies re forms of the fi nan cial sec tor in an ef fort to re duce risks. Mac ro eco nomic Per for mance The macroeconomic conditions which prevailed during 2010 were challenging, largely reflecting the lingering effects of the global economic recession. Macroeconomic performance was also negatively impacted by: drought con di tions which im pacted some in dus tries in the first half of the year re duced op er a tions at Air Ja maica prior to the air line s sale to Ca rib bean Air lines neg a tive im pact of the JDX Programme on net in ter est income of financial institutions The Event in West ern Kingston and sub se quent se cu - rity op er a tions in sec tions of St. Catherine and Clar en - don dur ing May and June Trop i cal De pres sion No. 16 and rains as so ci ated with Trop i cal Storm Nicole in Sep tem ber. The Jamaican economy contracted by an estimated 1.2 per cent in 2010, with the total value of Goods & Services produced, amounting to $ million. Both the Goods-producing and Services Industries declined by 1.7 per cent and 1.5 per cent, respectively. Jamaica s trade deficit with the rest of the world amounted to US$ million, representing a deterioration of US$128.1 million. This was due to an increase in imports of US$136.4 million which outweighed the US$8.9 million increase in exports. Total imports were valued at US$ million, with mineral fuel imports amounting to US$ million or 30.5 per cent. Merchandise exports were valued at US$ million of which Crude material (mainly Bauxite & Alumina) amounted to US$555.7 million or 41.8 per cent. The exchange rate at the end of December 2010 was $85.86 per US$1.00 compared with $89.60 per US$1.00 in This represented a nominal appreciation of 4.2 per cent. Total remittance inflows amounted to US$ million, an increase of US$115.9 million compared with The successful implementation of the JDX programme resulted in a decline in interest rates as the overall weighted average monthly loan rate at Commercial Banks at the end of the year was per cent, down 3.02 percentage points compared with 2009.The point-to-point inflation was 11.7 per cent, largely reflecting the impact of global and domestic impetus. The higher international grains and oil prices resulted in increased domestic food and fuel prices. Domestic influences included: a new tax pack age im ple mented on Jan u ary 1, 2010, which re sulted in a 1.0 per cent age point in - crease in the GCT rate as well as the ap pli ca tion of a 10 per cent GCT charged to res i den tial us ers with elec tric ity con sump tion above 200 ki lo watt hours per month in creased bus and taxi fare the im pact of weather-re lated shocks on food prices. For the period April-December 2010, the Central Government generated a deficit of $56.0 billion, which was $8.2 billion less than programmed. This was due to less than programmed revenue of $4.0 billion and less than programmed expenditure of $12.3 billion. SECTORAL PERFORMANCE GOODS PRODUCING INDUSTRIES Agriculture The Agriculture, Forestry & Fishing industry reported real GDP growth of 0.8 per cent, due largely to increased output in Other Agricultural Crops and Traditional Export Crops. Growth in these categories was spurred by continued efforts by the government in implementing strategies to improve competitiveness and strengthen the resilience of the industry. These included: wa ter con ser va tion and im proved ir ri ga tion ef fi - cien cies to re duce the ef fects of the drought plant ing in ar eas served by ir ri ga tion schemes in creased use of pro tec tive cul ti va tion (green - house) em ploy ing best prac tice meth od ol o gies and programmes un der the Min is try of Ag ri cul ture s Pro duc tion and Pro duc tiv ity En hance ment Programme. This programme of fered farm ers in - creased sup port in the ar eas of mar ket ing, ir ri ga - tion and extension services. However, the performance of the industry was tempered by drought conditions which prevailed in the first half of the year as well as by Tropical Depression No. 16 and rains associated with Tropical Storm Nicole in September Tropical Storm Nicole caused damage estimated at $576.5 million 6 to crops and livestock production. Mining and Quarrying Real value added for the Mining and Quarrying industry declined by 3.4 per cent. This was due to a 10.3 per cent decline in alumina production which outweighed a 35.0 per cent increase in crude bauxite production. In response to the improvement in global economy demand for alumina and crude bauxite the WINDALCO s Ewarton Plant reopened in 6 Ministry of Agriculture & Fisheries estimate

15 XII XII June This, coupled with increased crude bauxite production by Noranda Bauxite Company resulted in increased output by the industry during the second quarter of This was however outweighed by a 40.7 per cent decline recorded during the first quarter of Additionally, performance during the last thee quarters was spurred by the recovery of the Industrial Minerals Sector which exported increased volumes of limestone, cement, gypsum and pozzolan. Export earnings for bauxite and alumina totalled US$533.4 million for the calendar year, an increase of 14.3 per cent relative to Manufacture The Manufacture industry contracted by an estimated 2.6 per cent as the industry was affected by several demand-side and supply-side challenges. The demand-side challenges were attributed to relatively weak consumer demand for locally manufactured goods associated with the global economic recession, especially during the first half of the year. However, as more economies began to recover from the global economic recession during the last six months of 2010, international demand for some locally manufactured commodities strengthened. The supply-side challenges involved various disruptions to manufacturing operations which included: the Event in West ern Kingston and sec tions of St. Catherine and Clar en don. Dur ing the months of May and June, this de vel op ment re sulted in lost pro duc tion time due to plant closure the tem po rary clo sure by some man u fac tur ing op er a - tions to fa cil i tate plant main te nance and upgrade, ad verse weather con di tions. Pe ri ods of heavy rain fall and ad verse weather con di tions as so ci ated with Trop i - cal Storm Nicole in Sep tem ber 2010 af fected some man u fac tur ing operations. The value of total manufactured exports declined by 8.3 per cent, reflecting lower earnings from both Traditional (down 21.1 per cent) and Non-Traditional Manufactured Exports (down 5.6 per cent). This was consistent with the contraction in production and external demand for locally manufactured goods. Construction Real value added for the Construction industry fell by an estimated 2.2 per cent due largely to the lingering effects of the global economic crisis on the domestic economy. The performance was attributed mainly to a contraction in activities for the Building Construction and Building Installation categories. However, increased output was recorded for the Civil engineering category which benefited from construction of the Falmouth Cruise Pier and increased expenditure in response to emergency work after the passage of Tropical Depression No. 16 and rains associated with Tropical Storm Nicole. The downturn in the industry impacted the quantities of some inputs used in the production process, including labour and cement. The average number of persons employed in the industry amounted to persons, a decline of 6.7 per cent or persons. This industry recorded the largest absolute decline in employed labour force compared with all other industries. The supply of cement to the domestic market fell by 8.8 per cent to tonnes. This resulted from the combined effect of a 1.8 per cent decline in cement production to tonnes, a 25.4 per cent increase in cement imports to tonnes and a per cent increase in cement exports to tonnes. SERVICES INDUSTRIES En ergy, Elec tric ity and Wa ter The Electricity & Water Supply industry recorded a 4.3 per cent decline in real value added, a reversal compared with the 2.2 per cent growth realized in The decline in 2010 emanated from reductions in both electricity generation and water production. Total electricity generation fell by 1.8 per cent to GWh, reflecting contraction in output from both Jamaica Public Service Company (JPSCo) and non-jpsco sources. The lower generation was linked to the reduced demand associated with the global economic recession and the rainy and cold weather conditions that prevailed in the latter part of the year. This performance, however, must be viewed against the background of record peak demand on 2009, which resulted in record levels of generation from both JPSCo and non-jpsco sources. Total electricity sale for 2010 increased marginally (0.1 per cent) to GWh, also reflecting the low demand. All categories recorded higher sales, with the exception of Power Service. Despite the marginal increase in sales, JPSCo revenue rose by 15.1 per cent to $82.3 billion, reflecting increases in both the fuel and non-fuel revenue. Approximately megalitres of water was produced by the National Water Commission (NWC) compared with megalitres in Islandwide consumption increased by 5.6 per cent to megalitres. Of the total production, approximately 65.7 per cent was Non-Revenue Water (NRW), recording a decline of 9.4 per cent. Reflecting the higher K-factor, the NWC revenue increased by 2.4 per cent to $ million. Transport, Storage and Communication Real value added for the Transportation, Storage and Communication industry fell by 2.3 per cent relative to This stemmed from reductions in both segments of the industry. The decline in air transport activities associated with the global economic recession and the Air Jamaica transition contributed to the fallout in the Transport & Storage segment, while the decline in the Communication sub-industry was linked to a contraction in the telecommunications component. These declines were tempered by the improved activities at the island s sea-ports. Some of the indicators recording declines in the industry were passenger movement, down 1.0 per cent to and the number of fixed lines, fell by 4.4 per cent to Growth was reported for: the vol ume of do mes tic cargo han dled, which in - creased to mil lion tonnes from mil - lion tonnes the num ber of ship calls, in creas ing by 7.0 per cent to the num ber of mo bile sub scrib ers, up 6.2 per cent to ap prox i mately 3.1 mil lion. The increase in the number of mobile customers pushed the teledensity to 126.9/100 persons compared with 119/100 persons in However, the commensurate growth in real value added was not realized as increased competition resulted in an intensification of giveaways, and stymied subscriber expenditure.

16 XIII XIII A number of policy related activities were pursued in the area of transport during the year. These were associated with the Multi-modal Transport Concept, the Road Maintenance Master Plan, the Single Road Authority and the Drainage Master Plan. There was increased capital expenditure by the Ministry of Transport & Works and the National Works Agency, amounting to approximately $5.5 billion and $5.1 billion, respectively. This expenditure was used to facilitate work on the Northern Jamaica Development Programme; traffic management; the purchase of goods and services for the Flood Damage and Rehabilitation programme; and the repair and maintenance of existing roads. Work on Highway 2000 was facilitated by the National Road Construction Company (NROCC), whose expenditure declined 71.4 per cent to $803.1 million, as the Highway was 85.0 per cent near completion. Tourism Real value added for the Hotels & Restaurants 7 industry grew by an estimated 3.4 per cent. This was due primarily to increased stopover arrivals and visitor expenditure. Total visitor arrivals grew by 2.8 per cent to , reflecting increased stopover arrivals as cruise passenger arrivals declined. Stopover visitors increased by 4.9 per cent to due largely to marketing efforts as well as increased air seats, particularly from the USA market. Increased stopover arrivals were recorded in all months, except for May and June. The decline was attributed to the Events in Western Kingston and the subsequent travel advisories issued by Jamaica s main source markets. The Foreign Nationals 8 category grew by 5.0 per cent to while the Non-Resident Jamaican category increased by 3.8 per cent to The average length of stay for Foreign Nationals was 9.0 nights compared with 9.2 nights in For Non- Resident Jamaicans, the average length of stay was 16.4 nights compared with 16.5 nights in Total provisional visitor expenditure was US$ million, an increase of 3.5 per cent. Total stopover expenditure amounted to US$ million compared with US$ million during 2009, consistent with increased stopover arrivals. Total cruise expenditure decreased marginally by 0.9 per cent to US$77.0 million. The average annual employment in Hotels and Restaurants was persons compared with persons during Whole sale & Re tail Trade The WRTRIM industry declined by 2.0 per cent and accounted for 18.9 per cent of overall GDP. The lower value added was a result of contractions in domestic demand, associated with the prolonged effects of the global economic recession on the Jamaican economy. There was a decline in purchasing power associated with decreased average employment levels, a real decline in remittance inflows and a real reduction in the stock of loans and advances for private consumption. The decline in demand was evidenced by: a re duc tion in gross sales a fall in the vol ume and value of ABM & POS trans ac - tions. Additionally, distributors encountered higher operational costs and taxes. The contraction of the industry was stymied by an increase in merchandise goods imports. THE SO CIAL SEC TOR DEMOGRAPHICS AND THE LABOUR MARKET Population The population at the end of 2010 was estimated at with a growth rate of 0.3 per cent. The rate of natural increase was 9.4 per with estimated births and deaths at and , respectively, and net external movements at Migration continued to impact the population growth and structure; as well as other social and economic factors. The majority of migrants from Jamaica went to the USA. Jamaica is currently at an intermediate stage of the demographic transition. This is evident in the demographic ageing of the population (decreasing birth rates and relatively low death rates). The effects of the ageing population structure are apparent in the declining 0-14 age group; and the increasing working age, 15-64, and dependent elderly (65+) age groups. Concerted efforts were made to integrate population factors into development, monitoring and evaluation of policies, plans and programmes. This was evident in the Global Forum on Migration and Development; the work of the Vital Statistics Commission; the Jamaican Diaspora activities; the UNFPA Country Programme for Jamaica; and the 2010 Round of Population and Housing Census. La bour Mar ket In 2010, the number of persons in the labour force fell by 1.6 per cent to The labour force participation rate declined by 1.1 percentage points to 62.4 per cent. Both the male and female participation rates fell (by 1.4 percentage points and 0.9 percentage point, respectively). This resulted in a male participation rate of 70.4 per cent, and a female participation rate of 54.8 per cent. The contraction in domestic economic activity had a negative impact on employment, as the employment rate increased by 1.0 percentage point to 12.4 per cent. The employed labour force declined by 2.7 per cent to , with males continuing to represent the majority at 56.9 per cent. The male employed labour force stood at , having decreased by 2.5 per cent ( persons). The female employed labour force declined by 3.0 per cent ( persons) to The male unemployment rate was 9.2 per cent (an increase of 0.6 percentage point), while the female unemployment rate was 16.2 per cent (an increase of 1.4 percentage points). The youth (14 24 years) unemployment rate increased to 30.8 per cent from 27.1 per cent, while the adult (25 years and over) unemployment rate averaged 9.7 per cent compared with 8.9 per cent for Employment in the Goods Producing Industry declined by 4.3 per cent to , while employment in the Services Industry declined by 1.9 per cent to The Services 7 This category captures most of tourism s direct contribution to real value added. 8 This category consistently accounts for approximately 92.0 per cent of total stopover visitors.

17 XIV XIV Industry, therefore, accounted for 64.4 per cent of total employment. A total of Jamaicans participated in the Government Overseas Employment Programme, an increase of 8.3 per cent compared with Total remittances from workers employed in the USA increased by 18.7 per cent to US$7.3 million, while remittances from workers in the Canadian Farm and Factory Programme increased by 17.3 per cent to C$14.0 million. Approvals were granted for work permits, a decline of 4.9 per cent compared with Professionals, Senior Officials and Technicians were the main beneficiaries of work permits (76.9 per cent). There was no increase in the National Minimum Wage rates. The public sector wage freeze that came into effect in 2009 continued in The Public Sector Master Rationalization Plan was tabled as a Green Paper in Parliament in July. HUMAN DEVELOPMENT, WELFARE AND CULTURE Education and Training During the academic year 2010, the major highlights in the education and training sectors were creating access, improving student and teacher performance, and enhancing school management. Other emphases included upgrading health and nutritional support to students and extending the school leaving age. Indicators of performance in education revealed improvements in the literacy status of the population. Some school spaces were created at primary schools in Hanover, Portland, Westmoreland and Manchester at the primary level, while at the secondary level, spaces were created in Clarendon, St. Andrew and St. Ann. There was expansion of access at the tertiary level through the development of satellite campuses and the establishment of online programmes and weekend colleges at a number of institutions. In its thrust to improve student and teacher performance, and to achieve universal literacy by 2015, the MOE introduced a Competency Based Transition Approach for students progressing from primary to the secondary level. The approach will provide opportunities for students to be certified as numerate and literate before taking the Grade Six Achievement Test (GSAT) examinations. There were improved student performances in the GSAT, the Caribbean Secondary Education Certificate (CSEC) Examination and the Caribbean Advanced Proficiency Examination (CAPE). In-service training was conducted to equip teachers to deliver school curricula and improve school effectiveness. Developments in the training sector in the review period focused on redefining the HEART Trust/National Training Agency operated entities into Workforce Colleges and Technical Vocational and Education Training (TVET) Institutes and on incorporating training for at risk and unattached youth. An estimated 79.4 per cent ( persons) of the school-age cohort (3 24 years old) were enrolled for the 2009/10 academic year. The primary level accounted for 34.8 per cent of the total. The gross enrolment rates at pre-primary, primary, secondary and tertiary were 99.6 per cent, 92.1 per cent, 94.5 per cent and 32.8 per cent, respectively. In training institutions, the number of persons trained in the Professional, Senior Officials and Technicians category was (71.6 per cent female) while persons (58.9 per cent female) were trained as skilled and semi-skilled personnel. Health During 2010 the government continued its focus on access and the levels of utilization within the sector. A decline was observed in visits to public health centres compared with Despite this, demand for services within the public health sector remained high, particularly, pharmacy services, with an increase in the number of pharmacy items dispensed at both public health centres and public hospitals. Immunization coverage showed improvement and represented some of the highest coverage seen in the past five years. Immunization coverage has long been a cause for concern for the government and these results are due to increased investments made in that area during the year. With increased international attention being placed on the Millennium Development Goals (MDGs), focus remained on issues dealing with maternal and child health, and HIV/AIDS. Environmental health and vector control activities were undertaken and were geared at addressing sanitation issues and specific vector borne and parasitic diseases. The issues of staff shortage, remuneration and working conditions persisted during the year and the government continued to dialogue with various groups towards reaching an amicable settlement. There were also several initiatives by the government aimed at improving the overall infrastructure of some health facilities. National Security and Justice There was a decline in all major crimes during the review period. The work of the Jamaica Constabulary Force (JCF) in fighting crime was enhanced by the provision of a number of key pieces of equipment, improvements in technology and other strategic operational improvements. Implementation of the JCF Strategic Review also continued and an Anti-Corruption Strategy was developed and community based policing implemented islandwide. The Jamaica Defence Force provided operational support which was critical during the Events in Western Kingston in May. Efforts to reduce crime and violence were further improved through a number of social intervention programmes which targeted the most volatile and vulnerable communities, at-risk youth, ex-offenders and incarcerated persons. The National Crime Prevention and Community Safety Strategy, and the Jamaica Reducing Re-offending Action Plan were developed and implementation commenced. Plans also commenced on the merger of the Citizens Security and Justice Programme (CSJP) and the Community Security Initiative (CSI). A new Traffic Ticket Management System was implemented in both the JCF and the Courts. Work was completed on the new JCF armoury and work began on a facility to house male youth offenders. A number of other infrastructure projects were undertaken including upgrading of the police training facility; constructing and refurbishing court facilities; and construction of training facilities for incarcerated persons. Under the Justice Sector Reform Programme, a Criminal Case Management System that will assist in reducing the backlog of cases in the island s courts was piloted, a draft National Restorative Justice Policy was developed and four Restorative and Community Justice Centres launched.

18 XV XV Several pieces of legislation were enacted or amended during the year. Social Development, Social Protection and Culture Social development continued to be critical to the country s progress over the year, with efforts advanced to maintain gains already made, and to reduce the potential negative impact of the global recession. In this regard, the social welfare pogrammes were expanded in size and budgetary allocations, in order to reach more economically vulnerable groups. There were also increases in the benefits under the National Insurance Scheme (NIS), the contributory social pension programme. Other important reforms to the Scheme, including a phased increase of the pensionable age for women and an increase of the insurable wage ceiling, were effected during the year. Policies to protect children and adolescents, preserve their rights and enhance their citizenship and participation remained the focus of pertinent state organizations and non-state partners. Youth empowerment through human capital development was extended through various programmes and initiatives. Work continued on the drafting of a Disability Bill, a national instrument that when enacted will support the country s ratification of the United Nations Convention on the Rights of Persons with Disabilities. Combined efforts of government agencies, civil society groups and International Development Partners were the focus during the latter half of the year on defining a Community Renewal Programme, to address social, economic and environmental concerns in selected communities. Steps were also taken to address gender imbalances in the society through the finalization of a National Policy on Gender Equality, while advances were made in other policy and legislative areas.

19 CHAP TER 1 INTERNATIONAL ECONOMY INTRODUCTION Global mac ro eco nomic con di tions im proved dur ing 2010, as the in ter na tional econ omy re cov ered from the ef fects of the eco nomic and fi nan cial cri sis. There were ex pan sions in world out put, trade and in vest ment, spurred by an ar ray of fis cal and mon e tary stim u lus mea sures. Growth was driven pri mar ily by Emerg ing Mar ket & De vel op ing Coun tries, with China and In dia sur pass ing pre-cri sis lev els. Out put of Ad vanced Econ o mies also in creased, al beit at a slower rate than Emerging Market & Developing Countries. Global economic recovery, was, however constrained by relatively high unemployment levels in some Developed Economies, which led to dampened private consumption and production. The slower than expected growth in some countries reflected the waning of government incentives, fears of European financial market instability, and efforts by some Developing Asia and Latin American countries to prevent overheating of their economies. During the year, commodity prices on average were higher relative to This resulted mainly from, increased final consumption, higher levels of industrial production (intermediate consumption) and financial leveraging on the demand side. On the supply side, constraints were associated with weather-related shocks, declining inventories and trade policy restrictions. As a consequence, global prices increased, resulting in higher domestic prices for food, energy and transportation. The impasse of the World Trade Organization s (WTO), Doha Development Round continued in At the July Round of negotiations, countries again failed to reach a consensus around agriculture import rules. During a subsequent meeting held in November, members of the WTO issued a Declaration committing to negotiating a successful, ambitious, and balanced conclusion of the Doha Development Round. With respect to CARICOM/European Commission (EC) trade relations, preparatory work continued towards the implementation of a Free Trade Area (FTA) between the two regions as outlined under the existing Economic Partnership Agreement (EPA). Negotiations continued on establishing a free trade agreement between CARICOM and Canada as a successor to the CARIBCAN which expires in INTERNATIONAL ECONOMIC CONDITIONS World Out put Global economic activities grew for 2010, evidenced by the 5.0 per cent increase in output (Table 1.1). This growth emanated from increased consumption and investment stimulated by a combination of accommodative fiscal and monetary policies. Facilitated by these government incentives, consumer demand increased, as consumers were less hesitant to spend on high expenditure items. Firms responded to the incentives by replenishing low inventories and increasing production. Combined, these developments contributed to increased output of consumer durables and capital goods. The out-turn for the year was pushed mainly by robust growth in the first half as economic activity slowed in the latter half owing to: the wan ing of gov ern ment stim uli mea sures mea sures taken by some coun tries to slow li quid ity growth and in fla tion 1 planned fiscal austerity measures, particularly in the Euro Area. The rate of recovery varied across regions and was led by Emerging Market & Developing Countries which grew by 7.1 per cent (seetable 1.1). Performance in this category was led by Developing Asia, with China continuing its robust growth of 10.3 per cent. This reflected average quarterly growth rates of 11.1 per cent for the first two quarters of the year and 9.7 per cent for the last two quarters. The main contributors to overall growth within the Chinese economy were increases in Investment in Fixed Assets (23.8 per cent), Retail Sales of Consumer Goods (18.4 per cent), and Industrial Production (15.4 per cent). India contributed significantly to the performance of Developing Asia, recording a 9.7 per cent increase in output. Gross Domestic Product (GDP) expansion in China and India was pushed mainly by increased capital inflows, extensive fiscal stimuli and credit expansion which facilitated a rise in domestic demand. In addition, there was increased demand for Chinese and Indian exports. Latin America & the Caribbean recorded growth of 5.9 per cent, the highest regional expansion outside of Developing Asia (see Table 1.1). Countries in the region recording growth included, Argentina, Brazil, Colombia and Mexico. These 1 In October 2010, the Central Bank of the Peoples Republic of China increased interest rates by 25 basis points, resulting in increases to 2.25 per cent and 5.56 per cent in the one-year deposit rates and one-year lending rates, respectively. In November, further steps were taken to address rising inflation, with a 50 basis points increase in the reserve requirements.

20 performances outweighed lower output from countries such as Venezuela, Jamaica, Barbados and Haiti 2. Real GDP for Advanced Countries grew by an estimated 3.0 per cent relative to 2009, when a contraction of 3.4 per cent was recorded. This increase was in response to policy initiatives aimed at boosting consumer spending. The economy of the United States of America (USA) grew by 2.8 per cent, partly as a result of increased personal consumption expenditure, particularly on durable goods. Also contributing to the expansion was increased business investment which was pushed by targeted tax cuts to encourage private sector investment. Despite these improvements, sections of the economy remained fragile, with lingering weak demand in the housing market as reflected in declines in residential construction and home sales. Output in the Canadian economy rose 2.9 per cent, resulting from higher levels of consumption spending and business investment. The upward trend in commodity prices, particularly lumber and crude oil, also contributed to increased value added in Canada. Growth was, however, stymied by weak job growth, tight credit and declines in residential construction. The Japanese economy grew by 4.3 per cent. The main contributors to growth were higher levels of private and government consumption, non-residential investment, and net exports. Industrial production in Japan increased, driven largely by increased external demand. Real GDP of the Euro Area, rose by 1.8 per cent and was pushed by increases of 3.6 per cent and 1.7 per cent in the growth of output from Germany and the United Kingdom (UK), respectively. Growth in the Euro Area was, however, less than anticipated given reduced purchasing power of consumers TABLE 1.1 AN NUAL PER CENT CHANGE IN GLOBAL OUT PUT AND TRADE, r 2009 r 2010 p 2011 proj REAL GDP World Out put Ad vanced Coun tries United States of Amer ica Canada Japan Euro Area Ger many France It aly n.a United King dom Other Ad vanced coun tries Re gional Groups Emerg ing Mar ket & De vel op ing Coun tries De vel op ing Asia China Mid dle East & North Af rica Latin Amer ica & the Ca rib bean Com mon wealth of In de pend ent States (CIS) TRADE IN GOODS AND SER VICES World Trade (vol ume) Ex ports Ad vanced Coun tries Emerg ing & De vel op ing Coun tries Im ports (vol ume) Ad vanced Coun tries Emerg ing & De vel op ing Coun tries r - re vised p - pre lim i nary es ti mate proj - pro jec tions Source : IMF - WORLD ECO NOMIC OUT LOOK - Up date, Jan u ary The Haitian economy was severely impacted by the devastating earthquake in January 2010.

21 owing to relatively high unemployment levels, and stagnant incomes; and the unsustainably high budget deficits of some European countries including Greece, Ireland and Portugal. Financial instability was brought about by lower tax receipts and increased government spending. This led to concerns about the possibility of debt default and a downgrade of bonds by international rating agencies 3, resulting in increases in international bond yields. As a consequence, there was volatility in bond markets as investors shifted away from the perceived risky European bonds and towards financial instruments of countries perceived to be more fiscally stable. Measures implemented to address these developments in European financial markets, included: Strin gent fis cal mea sures - to con tain ris ing bud get def i cits sev eral Eu ro pean gov ern ments im ple - mented fis cal aus ter ity mea sures. The fi nan cial loan pack ages for Greece and Ire land, fa cil i tated by the IMF and the Eu ro pean Un ion was ac com pa nied by, among other things 4, aus tere fis cal mea sures in clud - ing cuts in gov ern ment spend ing and in vest ments 5. Sim i larly, other coun tries such as, Por tu gal, It aly and Spain adopted strin gent fis cal mea sures, in clu - sive of pub lic sec tor wage cuts and pen sion freezes. These mea sures also in cluded revenue enhancement measures through tax increases. Eu ro pean Cen tral Bank (ECB) Pol icy Ac tions - in May 2010, the ECB es tab lished the Eu ro pean Fi nan - cial Sta bil ity Fa cil ity so as to safe guard fi nan cial sta - bil ity in the Euro zone through the pro vi sion of fi - nan cial as sis tance to mem ber states along with, where necessary the recapitalization of banks and the purchase of sovereign debt. These interventions calmed existing market fears about the financial status of the Euro region, despite lingering concerns that planned expenditure cuts on the public sector could increase unemployment and hamper the economic recovery process. World Trade The volume of goods and services traded globally increased by 12.0 per cent, reflecting, in part, low trade volumes in 2009 and increased industrial production spurred by higher levels of aggregate demand. Growth in trade volumes was led by Emerging & Developing Countries which recorded growth rates of 12.8 per cent and 13.8 per cent in exports and imports, respectively (see Table 1.1) Total value of world exports increased to $18.3 trillion, an increase of 16.6 per cent. Of this total, goods exports were valued at $14.7 trillion, an increase of 19.5 per cent. The total value of services exports declined to $3.7 trillion, down 6.5 per cent. TABLE 1.2 AN NUAL AV ER AGE PER CENT CHANGE IN CON SUMER PRICES r 2006 r 2007 r 2008 r 2009 r 2010 e Ad vanced Econ o mies United States of Amer ica Japan Germany France It aly United King dom Canada Mem o ran dum: Eu ro pean Un ion Emerg ing Mar ket & De vel op ing Countries De vel op ing Asia Mid dle East & North Af rica Latin Amer ica & the Ca rib bean Com mon wealth of In de pend ent States r - re vised e - es ti mated Source : IMF - WORLD ECO NOMIC OUT LOOK, Oc to ber In June 2010, Moody s Investor Service downgraded Greek bonds to junk status. During 2010, Spain, Turkey, Portugal, Italy, and Ireland also received lower bond ratings by international rating agencies. Elements of the 110 billion and 85 billion received by Greece and Ireland included fiscal consolidation; financial sector and institutional reform; and public debt restructuring. These measures included reductions in public sector wages, allowances and bonuses, freezing state pensions, as well as a reduction in the number of public owned companies.

22 TA BLE 1.3a GLOBAL UN EM PLOY MENT RATE BY RE GIONS r 2010 p World De vel oped Econ o mies & Eu ro pean Un ion Cen tral & South-East ern Eu rope & CIS East Asia South-East Asia & the Pa cific South Asia Latin Amer ica & The Ca rib bean Mid dle East North Amer ica Sub-Saharan Africa r - re vised p - pre lim i nary es ti mate Source: ILO, Global Em ploy ment Trends, Jan u ary 2011 Inflation On average, prices were higher during 2010, relative to the previous year. Inflationary impulses largely emanated from the upward movement in commodity prices which led to increased prices for food, energy and transportation. Prices were, however, stymied by constrained aggregate demand due to cuts in fiscal expenditure and relatively higher unemployment levels and tax measures. Within Advanced Economies the average inflation was 1.4 per cent, compared with 0.1 per cent in The UK and Canada recorded the largest average increases of 3.1 per cent and 1.8 per cent, respectively (Table 1.2). Japan was the only Advanced Economy to record a reduction (-1.0 per cent) in consumer price index. Inflation for Emerging Market & Developing Countries was 6.2 per cent. In Developing Asia, inflation at 6.1 per cent almost doubled, relative to The increase in price levels in the Middle East & North Africa and Latin America & the Caribbean were marginally above inflation rates of the previous year (Table 1.2). Unemployment and La bour Mar ket Trends Average global unemployment rate was 6.2 per cent, 0.1 percentage point below the rate recorded in 2009 (Table 1.3a). The number of unemployed persons totalled 205 million, compared with million in The marginal decrease in unemployment levels was associated with increased output, consumption, investment and trade. At 8.8 per cent, unemployment rates remained relatively high in Developed Economies & European Union, compared with a three-year ( ) pre-crisis average of 6.3 per cent. In 2010, the Euro region recorded the largest increase, of 0.7 percentage point, driven by a 0.9 percentage point increase in Italy, and 0.4 percentage point each in France and the UK (Table 1.3b). These increases were, however, tempered by the 0.4 percentage point decline in the German unemployment rate. Within the North American region, the results were mixed, with a 0.4 percentage point increase in the US, and a reduction of 0.3 percentage point in Canada. After peaking at 6.2 per cent in 2009, the highest since 2000, global male unemployment level fell to 6.0 per cent. Increased male employment was derived from improved global TABLE 1.3b UN EM PLOY MENT RATE FOR IN DUS TRI AL IZED COUN TRIES (Per Cent) UNEMPLOYMENT RATE (per cent) r 2008 r 2009 r 2010 e In dus trial Coun tries United States of Amer ica Japan Euro Area Ger many France It aly United King dom Canada r - re vised e - es ti mated Source : IMF - WORLD ECO NOMIC OUT LOOK, Oc to ber 2010

23 macroeconomic environment which on average benefitted mainly males as the female unemployment rate remained at 6.5 per cent, relative to The employed labour force to population ratio increased by 0.2 percentage point to 61.3 per cent. Preliminary estimates revealed that global labour productivity increased by 3.1 per cent, compared with a decline of 1.4 per cent during This reflected increased productivity in all regions, with the largest increase in the Latin America & Caribbean region which increased by 3.0 per cent compared with a decline of 2.4 per cent in INTERNATIONAL TRADE POLICY AND COMMODITY MARKETS World Trade Or ga ni za tion (WTO) During 2010, Jamaica began preparation for its third Trade Policy Review by the WTO. These Reviews are mandated in the WTO agreement and is the process by which a country s trade related policies are evaluated by its peers. The aim is to identify and monitor any significant developments which may have an impact on the global trading system. The last trade policy review of Jamaica was done in 2005 and the current review will be completed in January Work during the year involved the preparation of a report which reviewed Jamaica s macroeconomic and trade policies and performance since The report was submitted to the WTO for circulation to all members. Following a review of the report by member countries, questions requiring further explanation or clarification on various trade related and macroeconomic trends observed were submitted to the Ministry of Foreign Affairs. Members which submitted questions were Canada, Brazil, and China. Among the main issues for which clarifications were sought was tariffs. Subsequent to the collapse of the 2008 summit, the WTO has continued its efforts of completing the Doha Development Round. Negotiations continued in 2010 with countries declaring at the Seoul and Yokohama Summits their intentions to comply with the Doha Mandate on tariff reductions. Accordingly, they re-emphasized their commitment to finding a speedy resolution to the current impasse. The primary area of disagreement involves the treatment of the Special Safeguard Mechanism (SSM). The SSM is a response mechanism in the form of additional custom duties which countries will be allowed to apply on agricultural imports in circumstances where the volume of imports increase beyond a specified benchmark level, or the price of the agricultural imports falls below a specified level. The group of agricultural exporting countries contends that there needs to be in place stringent conditionalities on the use of the SSM in order to prevent the arbitrary impositions of trade barriers. However, the proponents of the SSM contend that the proposed conditionalities will render the SSM useless to developing countries. CARICOM The work of Caricom focussed on the advancing negotiations on the Caricom/Canada Free Trade Agreement, and completion of preparation for the implementation of the ACP/EU Economic Partnership Agreement. CARICOM/Canada Work continued on preparations to establish a Free Trade Area between CARICOM and Canada. It is anticipated that the successful conclusion of this agreement will include the preferences currently being accessed by CARICOM members through the CARIBCAN agreement. The second round of negotiations was held in March 2010 and the primary areas of focus included: Mar ket Ac cess (Goods) - dis cus sions sur rounded Cus toms Pro ce dures and the ne ces sity to find a com - mon ground in the meth ods of goods ver i fi ca tion 6. Other areas discussed related to Technical Barriers to Trade, San i tary & Phytosanitary Mea sures, Trade Facilitation Mar ket Ac cess (Ser vices) - fo cused on the struc ture of the ser vices sec tor in CARICOM and Can ada. Within the con text of the global fi nan cial and eco nomic crisis In vest ment - ne go ti a tions fo cused on re gime that would build on cur rent Ca na dian in vest ments in CARICOM. Key priorities for CARICOM in these negotiations are the inclusion of a Development Dimension which involves the provision of development assistance to member countries to produce more efficiently and expand their export potential. Additionally, in recognition of the varying levels of development between the parties, CARICOM negotiators have also insisted on Special & Differential treatment (S&D) for member states. S&D treatment may involve among other things, differing timelines for the implementation of tariff liberalization measures as well as varying rates of tariff reduction. CARIFORUM-Economic Com mis sion (EC) Eco nomic Partnership Agreement (EPA) The EPA signed between CARIFORUM countries and the EC, governs the trading and investment relations between the two parties. The Agreement which was signed in late 2008, provides for among other things the liberalization of CARIFORUM markets to EU products over a specified period duty free-imports on 56.0 per cent of EU imports in five years, 61.1 per cent in 10 years, 82.7 per cent in 15 years, and 86.7 per cent in 25 years. CARIFORUM members secured a moratorium of three years on all goods except for motor vehicles, spare parts and gasoline which are exempted from liberalization in the short-term. During 2010, work continued to prepare member states for the implementation of various sections of the EPA. In accordance with the EPA, approval was sought and approved by the Jamaican Cabinet for the commencement of the phased liberalization of tariff lines. Drafting instructions were prepared for the Chief Parliamentary Counsel for the amendment to relevant sections of the Customs Act. 6 Under Bi-lateral trade agreements, goods must be certified as eligible to be included under the terms of agreement.

24 INTERNATIONAL COMMODITY MARKETS Com mod ity Prices The global economic recovery, the associated increased demand for capital goods and consumer durables resulted in an expansion in the demand for input. As a consequence, commodity prices trended upwards during The Energy Price Index increased by 19.8 per cent, compared with a decline of 37.3 per cent in This was associated mainly with the 28.0 per cent increase in average spot peak price of crude oil to US$79.04 (Table 1.4). Higher energy prices were fuelled by supply issues relating to OPEC s production restraints and declining inventory levels. On the demand side, prices were influenced by: in creased de mand for in dus trial and trans port pur - poses un usu ally cold win ter tem per a tures in the North ern Hemisphere. The index for Non-Energy Commodities moved up by 30.8 per cent, reflecting increases in the price indices for Food (9.3 per cent), Raw Materials (40.7 per cent) and Metals & Minerals (47.5 per cent). The rise in the Non-Energy commodity price index reflected mainly the impact of: in creased in ves tor de mand as so ci ated with hedges against financial and political risks strong de mand due to higher lev els of in dus trial pro - duc tion weather-re lated sup ply con straints in the case of food. Subsequent to a 9.2 per cent increase in the Food index during the first half of 2010, agricultural prices rose sharply (25.6 per cent) during the latter half. Price increases during the second half of the year was led by wheat for which severe drought and forest fires in Russia and neighbouring countries resulted in a decline in output. This was exacerbated by trade policies which included export bans and quotas 7. Other grain prices later increased as consumers compensated for the shortage of wheat by switching their demand. Fertilizer prices were constrained by the 47.4 per cent decline in the price of potassium chloride (see Table 1.4). Aluminium prices increased by 30.5 per cent to average US$2173 per tonne relative to Higher prices were due in part to robust demand to satisfy increased global industrial production, shortages of commodities and falling inventories. The 2009 end of the EU/ACP Preferential Sugar Agreement resulted in EU sugar prices reaching 2010 at US$ per kilogramme, a decline of 15.8 per cent. World and US sugar prices increased by 17.6 per cent and 44.4 per cent, respectively. These increases were, due in part, to increased demand and weather related supply shortages in the main sugar producing countries. TABLE 1.4 SE LECTED COM MOD ITY PRICE DATA, , US$ Com mod ity Price per unit % Change 2010 /2009 Crude Oil (Av er age Spot) $/bbl Coffee, arabica c/kg Cof fee, robusta c/kg Bananas, EU $/mt Bananas, US $/mt Oranges $/mt Sugar, US c/kg Sugar, World c/kg Sugar, EU c/kg Alu mi num $/mt Maize $/mt Sor ghum $/mt Wheat, HRW $/mt Phos phate Rock $/mt Po tas sium chlo ride $/mt Urea $/mt Source: The World Bank, Com mod ity Mar ket Re view, Jan u ary Effective August 15, 2010, Russian authorities banned all exports of grains. The Ukraine put a limit on grain exports through export quotas introduced in October 2010.

25 TABLE 1.5 GLOBAL FOR EIGN DI RECT IN VEST MENT IN FLOWS, , US$Bil lion r 2010 e % Change World De vel oped Econ o mies Eu rope United States Ja pan De vel op ing Coun tries Af rica Latin Amer ica & the Ca rib bean South & South East Asia South East Eu rope & the CIS Rus sian Fed er a tion n/a r - re vised e - es ti mated n/a - not available Source: UNCTAD - Global In vest ment Trends Mon i tor, Jan u ary 2011 TABLE 1.6 CAP I TAL FLOWS TO EMERG ING MAR KET & DE VEL OP ING COUN TRIES, , US$ Bil lion r 2006 r 2007 r 2008 r 2009 r 2010 p Latin Amer ica & The Ca rib bean Net Private Capital Flows Net Of fi cial Flows Change in Re serves a Sub-Saharan Africa Net Private Capital Flows Net Of fi cial Flows Change in Re serves a De vel op ing Asia Net Pri vate Cap i tal Flows Net Of fi cial Flows Change in Re serves a Cen tral & East ern Eu rope Net Pri vate Cap i tal Flows Net Of fi cial Flows Change in Re serves a Mid dle East & North Af rica Net Pri vate Cap i tal Flows Net Of fi cial Flows Change in Re serves a Com mon wealth of In de pend ent States Net Pri vate Cap i tal Flows Net Of fi cial Flows Change in Re serves a Total Net Pri vate Cap i tal Flows Net Of fi cial Flows Change in Re serves a a - mi nus in di cates an in crease p - pro jected r-revised Source : IMF - WORLD ECO NOMIC OUT LOOK, Oc to ber 2010

26 INTERNATIONAL FINANCIAL MARKETS Capital Flows Foreign Direct Investment was relatively stable during 2010, reaching US$1 122 billion relative to US$ billion for 2009 (Table 1.5). The distribution was uneven across countries, reflecting, a combination of factors. Low short-term interest rates, sluggish growth rates and fragile domestic financial markets caused some investors to move funds away from Developed Economies towards financial markets with robust growth and higher interest rates. Foreign Direct Inflows (FDI) to Developed Economies declined by 6.9 per cent to US$526.6 billion, the third consecutive year of reduction. Europe recorded the largest absolute decline, down US$83 billion. Lower flows to this region were due largely to volatile transactions of foreign affiliates and uncertainty with regards to the sovereign debt crisis. The $9.9 billion decline in foreign direct flows to Japan reflected the impact of several divestments of large companies. In contrast, flows to the USA increased by 43.3 per cent to US$186.1 billion, mainly attributed to increased reinvestment of earnings by foreign affiliates. FDI flows to Developing Countries grew to $524.8 billion, an increase of 9.7 per cent, pushed by robust demand and higher commodity prices, which resulted in an increase in the value of Mergers and Acquisitions. This increase in FDI flows was driven by increases of $41.6 billion and $24.5 billion in South & South East Asia and Latin America & the Caribbean, respectively (see Table 1.5). Within the Latin America & Caribbean region, the industries mainly receiving FDI flows were oil and gas, metal mining and food & beverages industries, with Brazil and Mexico receiving the largest shares. Net private capital flows to Emerging Market and Developing countries totalled US$339.6 billion, an increase of US$104.8 billion (Table 1.6). This out-turn represented increased reliance on multilateral financial assistance amidst high debt levels, low reserves, and balance of payments problems. The expansion in capital flows was also influenced by higher levels of short-term debt, bond and equity flows. This reflected the search by high income investors for relatively higher yields in compensation for relatively lower interest rates in Developed Economies. OUTLOOK The global economy is projected to grow by 4.4 per cent for 2011 (see Table 1.1). This increase is contingent on continued improvements in global financial and economic environment, through: the strength en ing of pri vate de mand, par tic u larly in ad vanced econ o mies fis cal con sol i da tion, al though de tract ing from ag - gregate demand will alleviate upward pressure on interest rates the re form of fi nan cial sec tors so as to re sume credit growth. It is anticipated that the impetus to growth will continue to come from Emerging Markets & Developing Countries with projected growth of 6.5 per cent. Real GDP of Advanced Countries is projected to grow by 2.5 per cent. These projections are, however, subject to several downside risks, including: per sis tently high un em ploy ment in many sev eral Ad vanced Econ o mies. It has been sug gested that ac - com mo da tive mac ro eco nomic pol i cies and in - creased pri vate credit are crit i cal to re duc ing the high levels of unemployment pol i cies which en cour age high pri vate or cor po rate sav ings, in emerg ing Asian Mar kets. These pol i cies dis tort de ci sion mak ing pro cesses and de ter in vest - ments in the non-tradeables sector frag ile Eu ro pean bank ing sec tor which con tinue to en coun ter low prof it abil ity, fund ing and sov er eign debt ex po sure. Re pair ing the bank ing sys tem is an es sen tial part of re sum ing credit growth and in - creased con sump tion.

27 CHAPTER 2 OFFICIAL DEVELOPMENT ASSISTANCE INTRODUCTION Multilateral and bilateral partners, through Official Development Assistance (ODA) 1, continued to support Jamaica s development priorities as outlined in the Medium Term Socio-Economic Policy Framework (MTF). The assistance was critical in maintaining macroeconomic stability, promoting social well-being, and fostering an enabling environment for private sector development. The sectoral distribution of overall development assistance, which was approximately US$2.9 billion 2, ($255.8 billion 3 ), was as follows: Administrative 4, US$1.2 billion ($105.6 billion); Economic Infrastructure 5, US$985.4 million ($86.1 billion); Social Infrastructure 6, US$422.6 million ($36.9 billion); and Directly Productive 7, US$311.6 million ($27.2 billion (Figure 2A). New ODA in 2010 was US$1.1 billion ($98.2 billion), a decrease of 4.7 per cent relative to 2009, and reflected the net effect of variations in the levels of commitments among the International Development Partners (IDPs) (Figure 2B). Newly approved projects and programmes by Multilateral Financial Institutions (MFIs) 8 and Multilateral Technical Cooperation agencies (MTCs) 9 increased by 50.2 per cent and 30.2 per cent, respectively, while new approvals from bilateral sources decreased by 63.3 per cent. Directly Productive 11% Economic Infrastructure 34% Social Infrastructure 14% Administrative 41% FIGURE 2A: SECTORAL ALLOCATION OF OVERALL ODA, ODA is concessionary loans, grants and technical assistance to developing countries for the promotion of their economic development and welfare as its main objective. 2 Amounts are rounded to one decimal point. 3 The average exchange rate of US$1 = J$87.38 is used. 4 Administrative Public Sector Reform, Budgetary Support 5 Economic Infrastructure Transport, Power, Water, Sewerage 6 Social Infrastructure Health, Education, Housing, Safety Net 7 Directly Productive Agriculture, Tourism, Mining, Manufacturing, Micro, Small and Medium Business Enterprises 8 These are institutions created by a group of countries that provide development financing for national development and include the Inter-American Development Bank, Caribbean Development Bank, the World Bank and the European Union, represented by the European Investment Bank and the European Commission. 9 These are institutions created by a group of countries that support national development primarily through the provision of technical assistance. They include the Food and Agriculture Organization, International Atomic Energy Agency, Organization of American States, Pan American Health Organization, UNAIDS, United Nations Environmental Programme, United Nations Education, Scientific and Cultural Organization, United Nations Children s Fund, United Nations Development Programme, United Nations Population Fund, and the Global Fund to Fight Aids, Tuberculosis and Malaria.

28 2.2 FIGURE 2B: TOTAL APPROVED ODA, Seventy-six per cent of new ODA was approved as budget support, the conditionalities of which were generally aligned with the government s policies. Key elements of the government s reform agenda were supported as it relates to education transformation, national security, justice, competitiveness, and fiscal management, including fiscal responsibility, debt management and tax reform. The use of budget support is indicative of the maturing relationship between Jamaica and the IDPs as it is premised on the use of national public financial management systems and procedures, as opposed to those of the IDPs. Budget support also requires regular policy dialogue with IDPs on government s reform agenda and macro-economic policies. The conclusion of a Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) in February facilitated approvals of new budget support resources from MFIs. The Inter-American Development Bank (IDB) and the World Bank, in particular, had delayed committing new resources for budget support in 2009 pending the conclusion of negotiations for the SBA. The increase in new budget support approvals from MFIs reflected their confidence in Jamaica s macro-economic stability as signalled by the finalization of the SBA. Total disbursements increased by per cent to US$1.3 billion ($110.7 billion), compared with 2009 (Figure 2C). MFIs accounted for 80.3 per cent of total disbursements, largely due to quick-disbursing loans for budget support programmes. Disbursements from bilateral sources registered an increase of per cent, due primarily to an increase of US$78.8 million ($6.9 billion) in disbursements for economic infrastructure projects under the cooperation programme with the People s Republic of China. There was also a 91.0 per cent increase in disbursements to US$12.4 million ($1.1 billion) from the United States Agency for International Development (USAID) under its new Country Assistance Strategy ( ). The rise in disbursements of 54.5 per cent compared with 2009 from MTCs, reflected increases from most of those agencies, with the Global Fund to Fight Aids, Tuberculosis and Malaria registering the largest increase (82.8 per cent). IDPs demonstrated responsiveness to emergent situations including the May 22 June 7, 2010 Events of Western Kingston as well as Tropical Depression No. 16 and rains US$ MILLION YEARS Bilateral Multilateral Financial Multilateral Technical FIGURE 2C: ODA DISBURSEMENT BY SOURCE,

29 2.3 associated with Tropical Storm Nicole in September. Following the Events of Western Kingston, the IDP community mobilized approximately US$ ($16.2 million) to assist the affected communities. The Events resulted in the government formulating the Community Renewal Programme (CRP), which is a coordinating framework to guide the design and implementation of violence reduction and community development projects. The IDP community actively participated in the development of the programme concept and committed their support. In the case of Tropical Depression No. 16 and rains associated with Tropical Storm Nicole, bilateral partners provided grants totalling $18.1 million toward recovery efforts in general, while the Caribbean Development Bank (CDB) reallocated US$29.0 million ($2.5 billion) for the rehabilitation, restoration and protection of the physical infrastructure of major segments of the Kingston Metropolitan Area (KMA) drainage system. THE DECADE Over the period, , the implications of ODA to Jamaica were highlighted in the face of a number of exogenous and endogenous shocks. The period saw two outbreaks of: violence in Western Kingston which resulted in: losses to the economy as well as loss of lives; floods in six of the years resulting from four hurricanes, two tropical storms, one tropical depression and other weather systems; two elections with one change of administration; two years with drought and fires; two years with sharp oil price increases; a ruling of the World Trade Organization against preferential trade agreements for sugar with the EU; a global food crisis; and global economic and financial crises which resulted in an SBA with the IMF. Key policy initiatives and development programmes were implemented with IDPs support, including the finalization of the National Development Plan Vision 2030 Jamaica and its related MTF; the Public Sector Modernization Programme; the Financial Sector Reform Programme; the Public Sector Investment Programme; Jamaica s membership in the Caribbean Court of Justice; the Petrocaribe Agreement on Energy Cooperation 10 ; and the Jamaica Country Strategy for Adaptation of the Sugar Industry ( ). Important development projects were also supported, including the Northern Coastal Highway Improvement Project; Highway 2000; the Half-Way-Tree and Downtown Kingston Transport Centres; upgrading of the local refinery; the Trelawny Multipurpose Stadium; the Montego Bay Convention Centre; upgrade of water supply systems island wide; the Programme of Advancement through Health and Education (PATH); the Citizen Security and Justice Programme; the Inner City Basic Services Programme; and the Agricultural Services Project. A total of US$4.8 billion was received as ODA for the period, Loans accounted for 80.7 per cent of this amount, while the remaining amount was grants. The amounts of approved loans and grants fluctuated over the period, with a general upward trend in loan approvals and a gradual increase in grant approvals (Figure 2D). While loan approvals generally exceeded grant approvals, due to a combination of factors in 2003 and 2004, grant approvals exceeded loan approvals. The government pursued a definite strategy to contain expenditure to meet fiscal targets, with only one loan approved in 2003 and a review of the loan portfolio with the IDB in 2004, which resulted in cancellations of about US$60.0 million. Concurrently, 2003 marked the start of programming under the 9 th European Development Fund (EDF), the first financial protocol of the Cotonou Partnership Agreement signed with the European Union (EU) in 2000, under which significant grant resources were committed. New grant resources from Canada and the United Kingdom were also approved in Continued commitment of resources under the 9 th EDF, as well as significant grant contributions following the passage of Hurricane Ivan in 2004, contributed to grant approvals surpassing loan approvals in that year. There was a sharp increase in loan approvals in 2006, which resulted from the approval of bilateral loans from the Government of Venezuela. With the change of administration in 2007, the new government made a concerted effort to secure concessionary loans from MFIs at lower interest rates than could be obtained on the capital market. This resulted in considerable increases in loan approvals between 2007 and US$ MILLION Loans Grants FIGURE 2D: ODA LOANS AND GRANTS APPROVED, The Petrocaribe Agreement on Energy Cooperation was agreed in June 2005, allowing for 40 per cent of the purchase price of petroleum products to be provided as concessionary loans for social and economic development over 25 years.

30 2.4 TABLE 2.1 SOURCES OF NEW ODA, US$MILLION Loans Grants Total Loans Grants Total Loans Grants Total Loans Grants Total Loans Grants Total Bilateral Multilateral Financial Multilateral Technical Total Source: Planning Institute of Jamaica and International Development Partners The increase in loan approvals in 2009 reflected the emergence of the People s Republic of China as a major source of bilateral loan financing, accounting for 44.0 per cent of new ODA in that year. Development assistance from MTCs remained modest over the period, but reflected notable increases in 2004, following the passage of Hurricane Ivan; and in 2008, when a new agreement with the Global Fund to Fight AIDS, Tuberculosis and Malaria was signed, which resulted in a per cent increase. Disbursements over the period totalled US$3.8 billion, trending generally upward from US$215.6 million in 2001 to US$1.3 billion in 2010 (see Figure 2C). The sharp rise in 2006 reflected the concessionary loans from the Government of Venezuela, which were disbursed immediately upon approval, while the sharp increase in 2010 reflected disbursements under various budget support programmes with MFIs, as previously mentioned. FINANCING New ODA in 2010 totalled US$1.1 billion ($98.2 billion) comprising grants of US$112.8 million ($9.9 billion) and loans of US$1.0 billion ($88.3 billion) (Table 2.1). The MFIs accounted for US$903.0 million ($78.9 billion), with loans totalling US$850.0 million ($74.3 billion) and grants of US$53.0 million ($4.6 billion). New ODA from MFIs represented an increase of 50.2 per cent compared with The IDB was the largest contributor to the portfolio of new loans with six new policy-based loans for budget support and two new investment loans which totalled US$630.0 million ($55.0 billion). The European Union was the largest contributor to the portfolio of new grants, accounting for US$52.9 million ($4.6 billion) (Table 2.2). New ODA from bilateral sources decreased by 63.3 per cent to US$208.1 million ($18.2 billion), with loans accounting for US$160.5 million ($14.0 billion) and grants totalling US$47.6 million ($4.2 billion). The loan portfolio decreased by 68.4 per cent compared with 2009, when loans totalling US$508.0 million ($44.4 billion) were agreed with the People s Republic of China. Despite this decrease, the level of new loan approvals from bilateral sources was still relatively high compared with previous years because of new loans from the People s Republic of China and Belgium. The grant portfolio decreased by 20.4 per cent compared with 2009 as a result of lower grant resources from the People s Republic of China, the United Kingdom and Cuba which were the major contributors. The decrease in grant resources was, however, partly offset by the increased commitments under the new Country Strategy ( ) with the USAID. Assistance from MTCs totalled US$12.2 million ($1.1 billion), an increase of 53.8 per cent compared with This increase was attributable to the efforts of the UNDP to mobilize resources from bilateral sources, as well as from the Global Environment Facility. Total ODA disbursements increased by per cent to US$1.3 billion ($110.7 billion) compared with 2009 (see Table 2.2). Loan disbursements were US$1.1 billion ($96.1 billion) reflecting a per cent increase, while grant disbursements were US$167.7 million ($14.7 billion) representing a 9.7 per cent increase. The increase in loan disbursements was mainly due to the release of the six policy-based loans by the IDB, a development policy loan from the World Bank and a policy-based loan from the CDB. SECTORAL DISTRIBUTION OF NEW ODA New ODA was directed primarily at the Administrative sector which accounted for US$858.0 million ($75.0 billion), while the Economic Infrastructure, Social Infrastructure and Directly Productive sectors accounted for US$163.7 million ($14.3 billion), US$77.0 million ($6.7 billion) and US$24.7 million ($2.2 billion), respectively (Figure 2E). The dominant focus on the Administrative sector reflected the increase in budget support commitments by the MFIs, with 93.6 per cent of new MFI commitments being directed to that sector. Seventy-eight per cent of new assistance from bilateral sources was focussed primarily in the Economic Infrastructure sector, while assistance from MTCs mainly targetted the Administrative and Social Infrastructure sectors, which accounted for 49.2 per cent and 32.8 per cent, respectively (see Table 2.2). NET FLOWS Net flows between Jamaica and its three major development financing agencies (IDB, CDB and World Bank) was US$755.8 million ($66.0 billion), an increase of per cent compared with 2009 (Table 2.3). Total repayment of principal, interest and other charges decreased by 19.8 per cent to US$155.7 million ($13.6 billion), while disbursements to ongoing projects and programmes totalled US$911.5 million ($79.6 billion), an increase of per cent compared with The rise in the positive net flow position is reflective of the increase in disbursements from all three banks, as a result of the government s continued strategy of pursuing loan financing

31 2.5 from multilateral partners to secure longer tenure and lower cost financing for budgetary support. Caribbean Development Bank The cooperation programme between Jamaica and the Caribbean Development Bank (CDB) consisted of 22 projects amounting to US$407.9 million ($35.6 billion). The portfolio comprised 16 loans totalling US$332.5 million ($29.1 billion), and six grants amounting to US$12.3 million ($1.1 billion). Counterpart contribution totalled US$63.4 million ($5.5 billion), representing US$60.8 million ($5.3 billion) towards loan projects and US$2.6 million ($227.2 million) for grant funded projects. TABLE 2.2 SUMMARY OF 2010 OFFICIAL DEVELOPMENT ASSISTANCE US$MILLION International Development Partners New ODA Disbursement Sectors for New ODA Loan Grant Total Loan Grant Total Directly Productive Administrative Social Infrastructure Economic Infrastructure Total MFI CDB EU IDB IBRD Sub-Total Bilateral Australia Belgium Brazil Canada People's Republic of China Czech Republic Germany India Japan South Korea Spain United Kingdom United States of America Venezuela Scholarships Tropical Storm Nicole Sub-Total MTC CFTC IAEA PAHO UNAIDS UNEP FAO OAS UNESCO UNICEF UNFPA Global Fund UNDP Sub-Total TOTAL MFI - Multilateral Financial Institutions MTC - Multilateral Technical Cooperation Agencies Source: Planning Institute of Jamaica and International Development Partners

32 2.6 Economic Infrastructure 15% Directly Productive 2% Social Infrastructure 7% Administrative 76% FIGURE 2E: DISTRIBUTION OF NEW ODA, 2010 Unlike the other MFIs, most of the ODA from the CDB was in the form of traditional investment projects with the Economic Infrastructure sector being the beneficiary of 45.5 per cent of CDB assistance (Table 2.4). The Administrative, Social Infrastructure and Directly Productive sectors accounted for 29.5 per cent, 20.3 per cent and 4.7 per cent, respectively. Total disbursement was US$65.6 million ($5.7 billion), of which loans accounted for US$63.1 million ($5.5 billion), an increase of 13.6 per cent compared with Grant disbursements amounted to US$2.5 million ($218.5 million). One new project, the Support for Jamaica s Student Loan Bureau Project was approved in the amount of US$20.0 million ($1.7 billion) and will be implemented over a four-year period. The Project is aimed at enhancing the employability and entrepreneurial prospects of an increased proportion of persons from poor and vulnerable households by financing their participation in and completion of tertiary level training. The Tropical Storm Nicole Rehabilitation Works Project was also approved with financing of US$29.0 million ($2.5 billion), and is to be facilitated through the reallocation of resources from two projects the Hurricane Dean Rehabilitation Works Project for US$15.2 million ($1.3 billion) and the Tropical Storm Gustav Rehabilitation Works Project for US$13.8 million ($1.2 billion). The Project aims to reduce the flood risk of the Kingston Metropolitan Area (KMA), especially its impact on the vulnerable through the rehabilitation, restoration and protection of the physical infrastructure of major segments of the KMAdrainage system. The Northern Coastal Highway Improvement Project ( ) for US$73.5 million ($6.4 billion) ended. The Project supported the improvement of the geometric and safety standards of Section 1 of Segment II of the roadway between Montego Bay and Falmouth, in an effort to reduce vehicle operating costs, travel time and the incidences of accidents. The objective of the Project was to induce and support additional private direct investment in hotel development and other tourism-related services that generate new employment, foreign exchange earnings and contribute to further rural development. European Union TABLE 2.3 NET FLOW (US$ MILLION) The EU was, as in previous years, the largest provider of grant resources to Jamaica. The cooperation programme with the European Union (EU) consisted of grants totalling million ($37.2 billion) 11 for 17 projects and programmes, with local counterpart contribution of 11.1 million ($1.3 billion). Assistance from the EU mainly targetted the Administrative sector (see Table 2.4), which accounted for 53.9 per cent of ODA. The focus on this sector demonstrated the increasing use of budget support as the preferred modality for delivery of aid IDB CDB IBRD TOTAL Loan Disbursements DEBT SERVICING: Repayments (Principals) Interest and Charges Net Cash Flow Source: Planning Institute of Jamaica and International Development Partners 11 The average exchange rate of 1: $ is used.