CONTENTS

This paper evaluates the sustainability of Jamaica’s current account positions over the period 1962 to 2002 as well over the medium term. An intertemporal model of sustainability is employed for the historical data, while the traditional accounting and present value approaches are used to evaluate the prospects for the current account. The historical current account balances were, in general, above optimal, and as such they did not breach the solvency condition for sustainability. Notwithstanding, there were periods of chronic imbalances that precipitated dramatic reversals in policy and/or investor sentiment. The outlook suggests that the economy’s net external liabilities will grow, with the risk of investors perceiving the trend as unsustainable. The paper also considers the sustainability of transfers, an important component of the Jamaican current account. The tentative view is that these inflows will continue, but there are risks to their long