Net International Reserves are often viewed as a form of economic insurance, used to back liabilities held by a government. The accumulation of net international reserves can be considered as one indicator of a nation’s ability to repay foreign debt and can therefore affect a country’s credit rating. With this in mind, it is evident why building the net international reserves of the nation was a central aspect of the Jamaica’s 2013 EFF agreement with the IMF.
With regard to this, in 2015, Jamaica surpassed its agreed targeted level of NIR in each month of the year.
The reserve reached its 2015 peak in August at US$2.54 billion, just short of the 5 year high of US$2.60 billion achieved in April 2011. From December 2014 to December 2015, NIR moved from US$2 billion to US$2.44 billion, a 22% increase. Comparatively, NIR increased by 91% in 2014 and decreased by 7% in 2013. Overall, since the signing of the IMF deal in May 2013, NIR has increased by 146%.
While the IMF has lauded our efforts in this regard, some worry this policy may restrict market liquidity, while others believe the NIR is a misunderstood indicator. What are your thoughts on Jamaica’s NIR performance in 2015? Comment to let us know.
For further reading on the NIR in 2015, view the year’s EPOC Communiques on the IMF Special section of diGJamaica.