Sep 27, 2021 Last Updated 9:08 AM, Sep 17, 2021

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IMF releases the Financial System Stability Assessment (FSSA) arising from Jamaica’s 2018 Financial Sector Assessment Programme (FSAP)

The Minister of Finance and the Public Service, the Hon Dr Nigel Clarke, MP announced that the International Monetary Fund (IMF) today released the report of the 2018 Financial System Stability Assessment (FSSA) of Jamaica.

The FSSA is the outcome of the Financial Sector Assessment Programme (FSAP) review conducted for Jamaica earlier in the year. An FSAP is a comprehensive and in-depth analysis of a country's financial sector that is conducted jointly by the IMF and the World Bank (WB) for all countries.

Commenting on the release of the report, Minister Clarke affirmed that "Jamaica remains committed to the adoption of international standards and best practices, tailored to domestic needs and economic conditions." According to the Minister, "the FSSA acknowledges Jamaica's improved macroeconomic environment and the broad resilience of the financial sector and validates Government initiatives currently underway that are aimed at deepening financial markets and enhancing the framework for financial sector regulation and supervision. Deeper financial markets support financial inclusion and sustainable economic growth and job creation."

Chair of the Financial Regulatory Committee (FRC), Governor Brian Wynter remarked that "the members of the FRC (the Financial Services Commission, the Jamaica Deposit Insurance Corporation, the Ministry of Finance and the Public Service and Bank of Jamaica) welcome the positive results of the assessment of Jamaica's financial system as well as the constructive comments, feedback and recommendations, all of which are geared at further bolstering financial system soundness and resilience".

The FSSA reported on the stress tests carried out on large financial institutions as a standard part of FSAP assessments. The stress tests confirmed that, based primarily on the strength of their balance sheets, banks, securities dealers and insurance companies are broadly resilient to large price changes in financial markets and disruptions that could arise from negative shocks (such as hurricanes) to real sector activities.

The FSSA also identified significant vulnerabilities to the Jamaican financial system that require on-going attention from the respective authorities in the drive to maintain financial system stability. These vulnerabilities include:
• exposure to risks arising from natural disasters and tightening global financial conditions; and
• highly conglomerated and connected financial groups which create the potential for risks to spread from one financial institution to another.

In this regard, the report underscored the importance of the work currently in progress that will further strengthen the regulatory framework and enhance the resiliency of the financial system. Amongst other things, this includes the on-going roll-out of risk-based supervision by Bank of Jamaica and the Financial Services Commission, the strengthening of the macroprudential framework and the development of a special resolution regime for financial institutions. The report also noted that there is scope for gradual diversification of the investment portfolios of pension funds to mitigate the risks of low returns being borne by persons who are members of defined contribution schemes. Also highlighted was the opportunity to deepen financial markets to provide a wider range of intermediation services to the public, especially with respect to corporate debt and equity products, as the government continues to pay down its debt at a rapid pace.

With assistance from international partners, including the IMF, the World Bank and the Toronto Centre (Global Leadership in Financial Supervision), the authorities are implementing projects to:
• develop a policy on national disaster risk financing that aims to see Jamaica becoming more fiscally independent when disasters strike;
• undertake group-wide supervision of financial conglomerates;
• strengthen liquidity risk management in the financial sector by introducing international standards; and
• develop an agenda for financial market deepening that will revolve around: (i) accelerating access to finance, (ii) accelerating the creation of investible domestic assets, (iii) creating an environment where market participants can access financial instruments that assist them in managing risk and (iv) increasing transparency and price discovery in financial markets.

The FSSA report also highlighted the good progress by Jamaica in implementing recommendations from Jamaica's previous FSAP in 2006, in particular with respect to: (i) security dealers' activities via implementation of a regulatory framework for issuers, collective investment schemes and intermediaries; (ii) granting enhanced supervisory powers to Bank of Jamaica for the oversight of financial groups; and (iii) the introduction of the real-time gross settlements payments system and the central securities depository, which modernized Jamaica's payments system infrastructure.

The FSSA report on Jamaica released by the IMF can be accessed at []

An FSAP is a comprehensive and in-depth analysis of a country's financial sector that is conducted jointly by the IMF and the World Bank (WB). The goal of an FSAP is to gauge the stability and soundness of a country's financial sector and to assess its potential contribution to growth and development. The review is also an opportunity for a country to measure its compliance with widely accepted international financial sector regulation standards, codes and practices. Several countries voluntarily invite the IMF and the WB to conduct these reviews periodically as a benchmarking exercise and because of the obvious benefits of an FSAP in relation to the effective development of financial sector policies and programmes.

The first FSAP conducted on Jamaica's financial system was carried out in 2005, with the detailed report finalized in 2006.

For further information contact:
Communication & Public Relations Branch
Ministry of Finance and the Public Service
30 National Heroes Circle
Kingston 4
Tel: (876) 932-4656/4660/4655
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Contact: Elaine Oxamendi Vicet/ Daniel Passley

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