IMF approves $932m loan for Jamaica
Updated: 2013-05-02 16:15
KINGSTON - The International Monetary Fund (IMF) agreed Wednesday to provide $932 million in a four-year loan package for Jamaica to revive the country's shaky economy.
The loan is part of a 2-billion-dollar package from the IMF, the World Bank and the Inter-American Development Bank, which is aimed at supporting a set of reforms for the debt-swamped Caribbean island nation.
"The main objective of the program is to put public debt on a firmly downward trajectory and thereby create a virtuous cycle of debt sustainability and higher economic growth," IMF First Deputy Managing Director David Lipton said in a statement.
"For most of the past three decades, Jamaica has suffered from very low growth, high public debt, and serious social challenges. Key factors behind these problems have been Jamaica's unsustainable debt burden, low competitiveness, a weak business climate, and lack of policy credibility," Lipton said.
To close the deal with the IMF, Jamaican authorities have put in place several reforms, including launching a domestic debt swap to put its finances on a better footing.
Other measures include freezing public servants' wages and cutting national budget by 13.5 percent to bring down the national debt, which now accounts for 140 percent of the country's gross domestic product (GDP).
"The signing of the IMF agreement signals a new direction which in turn requires a paradigm shift in how we conduct the nation's business," said Jamaican Finance Minister Peter Phillips on Wednesday.
Prime Minister Portia Simpson Miller has said that the new program was critical to boosting investors' confidence, making necessary reforms and unlocking hundreds of millions of dollars from international organizations.
Jamaica is expected to receive the first disbursement of 90 million dollars in the next few days. To cushion the possible impact on the most vulnerable, the program also includes measures to ensure adequate social spending and a strengthened social safety net.
"Although the risks to the program are high, the implementation of the prior actions, the front-loaded nature of the reform agenda, and the envisaged collaboration with development partners should help foster the successful implementation of the program," Lipton said.