Jamaica’s reserves rise as borrowed foreign funds enter the balance

Jamaica’s net international reserves increased by US$541 million in September to approximately US$7.2 billion, according to Radio Jamaica’s report. The August balance was about US$6.6 billion.

The change and the rounded balances describe the same series at different levels of precision. The exact monthly increase should not be replaced with a calculation using the rounded headline totals.

Foreign assets rose by US$538 million. Radio Jamaica attributes part of that increase to proceeds from the Government’s recent US$1 billion borrowing and foreign-exchange sales through the Bank of Jamaica. The source of the increase matters: borrowed foreign currency can strengthen the reserve position while creating or retaining a financing obligation elsewhere in the public balance sheet.

The report does not allocate the whole reserve increase to borrowing, nor say that the full US$1 billion issue was retained in the reserve balance. It establishes a contribution from the transaction, rather than a complete reconciliation of every flow.

Currency and deposits at the Federal Reserve Bank of New York increased by US$532.6 million to roughly US$3.9 billion. The corresponding August figure was about US$3.4 billion. This was the largest reported component movement.

Foreign securities increased by US$6.71 million to approximately US$3.1 billion, from a rounded US$3 billion. Securities and deposits are different forms in which foreign reserve assets can be held; a rise in the aggregate can coincide with changes in their composition.

Special Drawing Rights declined by about US$1 million to US$161 million, from US$162 million. Jamaica’s IMF reserve position fell by US$0.25 million, from US$37.44 million to US$37.19 million. Those declines were much smaller than the increase in currency and deposits, but they are part of the reported monthly account.

Net international reserves measure reserve assets after the relevant short-term foreign liabilities are deducted. The measure concerns the reserve position, rather than all of Jamaica’s assets and debts.

A stronger reserve balance can provide more foreign-currency resources within that framework. It is not a direct measure of export earnings, household income or the country’s net wealth. September’s borrowing contribution makes that distinction especially relevant: the asset increase and the associated financing need must be understood separately.