FINANCIAL POLICY COMMITTEE STATEMENT
On the occasion of its meeting on 02 June 2021 and on its review of financial system risks over the March 2021 quarter, the Financial Policy Committee issues the following statement:
“Macro-financial conditions, as indicated by individual and composite indicators of financial developments, remained stable during the March 2021 quarter. Financial institutions also continued to be well-capitalized and largely remained resilient to simulated financial shocks. This performance occurred in the context of the stable macroeconomic environment and the continued recovery of the Jamaican economy.
There has been a significant decline in the stock of loan moratoria provided by banks. Continued weakness in the debt profile of some borrowers, particularly in the tourism sector, during the March 2021 quarter led deposit-taking institutions to maintain payment accommodations. Given the highly interconnected nature of financial institutions, Bank of Jamaica continues its enhanced surveillance of the financial system.
The global economy is projected to experience strong recovery in 2021. This recovery is expected to have strong spill-over effects on the Jamaican economy which, coupled with appropriate fiscal and monetary policies to mitigate the impact of the COVID-19 pandemic, should support a recovery of the Jamaican economy in the near-term. This outlook will allow deposit-taking institutions to release loan-loss reserves set aside during the pandemic as the debt repayment capacity of borrowers improve. Further, as the Jamaican economy recovers and as capital markets regain momentum, we expect that financial entities will begin to report increased profits.
The supervisors of the financial system will continue their enhanced monitoring of early warning indicators to ensure that the system remains sound.”
Financial Policy Committee
02 June 2021
