The Jamaican Government has agreed a new three year US$1.7bn standby programme with the International Monetary Fund (IMF). It hopes that the new programme will enable it to take forward its economic recovery and lead to accelerated growth.
The staff level agreement, which requires formal IMF Executive Board ratification in November, will replace the country’s existing IMF Extended Fund Facility that ends in March 2017.
Announcing the agreement, the Prime Minister, Andrew Holness, said on October 13 that the new facility was a precautionary agreement. Speaking to the media in Kingston, he said that the facility was an “insurance policy” against unforeseen economic shocks beyond Jamaica’s control, and that that its availability was a “dividend” that the country has reaped through its strong macroeconomic management, credibility and discipline. The request was made, he said, consequent on the country’s robust foreign exchange reserves.
Mr Holness said that a new programme agreed with the IMF emphasised the need for reorientation and transformation of the public sector into an “efficient performance-focused facilitator of growth, social well-being and the rule of law.”
He said that his administration’s goals and direction would now include:
• reorienting public resource allocation towards infrastructure
• social protection
• security related spending
• transforming the public sector to become more efficient and delivery-focused.
He also said that his government intended to modernise the country’s monetary policy framework, whilst building the foundation for an eventual move to inflation targeting, bolstering the resilience of Jamaica’s financial system, and implementing initiatives to enhance the country’s growth potential and promote private sector job creation.
Speaking alongside the Prime Minister, the Director of the IMF’s Western Hemisphere Department, Dr Alejandro Werner, said that the new agreement reflects the significant focus being placed by Jamaica on attaining inclusive growth. He also observed that in achieving macroeconomic stability the country was setting the stage for accelerated economic growth.
“We are seeing low inflation, we are seeing declining debt to GDP, we are seeing a contained current account deficit, the rebuilding of the international asset position by the central bank… and the foundations of a predictable (and positive) economy for the years to come,” Mr Werner said.
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