Jamaica reduced its oil import bill by more than US$438 million ($52 billion) for the first six months of the fiscal year based on the slide of commodity prices, according to newly released data from the Bank of Jamaica (BOJ).
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| A section of the Petrojam oil refinery in Kingston. |
The savings resulted in slashing the island's current account deficit to US$195.1 million between April and September 2015 from the deficit of US$632.3 million a year earlier.
It's rare for Jamaica - a net importer of finished products - to reduce its current account balance but the collapse of world oil prices has changed that trajectory. Jamaica achieved its first current account surplus in a decade in the January-March 2015 period. The current account documents the economic activities between the residents of a given country with the rest of the world over a given period.
"This improvement was driven by a fall in imports which was partially offset by a decline in exports," said the central bank's balance of payments report for September 2015. Global oil prices dropped from a recent high of US$115 in June 2014 to some US$31 a barrel.
Despite the fall in oil imports, Jamaica still imported more goods and services at US$3.23 billion compared to exports of US$2 billion over the half-year. But the reduction in oil imports narrowed the gap.
The capital account balance recorded a surplus of US$1.5 billion for the review period, primarily reflecting the discounted PetroCaribe debt repurchase, the BOJ said.
"This out-turn together with the balance on the current account yielded a combined net lending balance of US$1.3 billion, compared to a net borrowing balance of US$629.3 million in the previous corresponding period," the report stated. more
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