September 5, 2023
According to the Jamaica Observer, “Jamaica is set to draw down US$255 million in loans from the International Monetary Fund (IMF) under the Resilience and Sustainability Facility (RSF) with the money to be steered towards refinancing high interest debt coming to maturity shortly.”
The IMF loan has a maturity of 20 years and is priced at a low interest rate which should aid with significant savings each year to the available balance the Government has to spend and discharge funds that would have otherwise been used for interest payments to be spent on other things.
The IMF board, having expressed satisfaction with the country’s progress to strengthen resilience to the physical and fiscal impacts of climate change, made the funds available.
The Jamaica Observer highlighted that the loan will be the first drawdown from the US$764-million facility which was entered into in March of this year. The country at that time also entered into an arrangement to have access to US$968 million under the Precautionary and Liquidity Line (PLL). The country now has access to US$611 million of that PLL fund but has indicated that the funds will only be accessed if needed.
The PLL is to provide insurance against shocks such as from higher commodity prices, a global slowdown, tighter-than-envisaged global financial conditions, and new COVID outbreaks. The PLL is also a low-interest loan which is to be repaid over 20 years, if utilized, at low interest rates.
Following the board’s discussion, Antoinette Monsio Sayeh, deputy managing director and acting chair of the IMF Board, issued the following statement:
“Jamaica continues to make significant progress in strengthening its policy frameworks and implementing an ambitious climate policy agenda, supported by the Precautionary and Liquidity Line (PLL) and the Resilience and Sustainability Facility (RSF) arrangement.”
“Entrenched macroeconomic stability and sound policy frameworks continue to support economic growth, allowing Jamaica to navigate a complex global environment. A large primary fiscal surplus continues to support a strong downward trajectory of public debt, the financial system remains well capitalized, liquid, and stable, and inflation is converging to the midpoint of the Bank of Jamaica’s target band.”
“The authorities are advancing their ambitious climate policy agenda to increase resilience to climate change and green the economy. Reforms include the adoption of a disaster risk financing policy, the addition of climate requirements to the framework for private-public partnerships, the approval of an electric vehicle policy and the issuance of guidelines for energy efficiency in public buildings, schools, and hospitals.”
“Climate-oriented reforms of the fiscal framework, incentives for investments in renewables and the greening of the financial system can foster investor confidence and catalyze private climate financing.”
Measures made to strengthen the anti-money laundering/combating the financing of terrorism (AML/CFT) framework were also acknowledged, with the fund urging the authorities to now prove that the laws that were passed work as intended in line with international best practices.
The IMF noted, “Moving forward, efforts should focus on demonstrating the AML/CFT framework’s effectiveness in line with the action plan agreed with FATF.” Jamaica must demonstrate that the measures work before the Financial Action Task Force (FATF) will consider removing the country from its grey list.
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