Press Release: IMF Executive Board Concludes Second Review Under Stand-By Arrangement with Jamaica and Approves US$49.2 Million Disbursement
September 24, 2010Press Release No. 10/353
September 24, 2010
The Executive Board of the International Monetary Fund (IMF) today concluded the second review of Jamaica’s economic performance under the Stand-By Arrangement (SBA). Completion of the review enables the immediate disbursement of an amount equivalent to SDR 31.9 million (about US$49.2 million), bringing total disbursements under the arrangement to SDR 509.9 million (about US$786.2 million).
The program performance continues to be positive, with all end-June quantitative performance criteria met and all but one structural benchmark completed, owing to circumstances beyond the Jamaican authorities control.
The IMF’s Executive Board approved a 27-month SBA in an amount equivalent to SDR 820.5 million (about US$1.27 billion; 300 percent of quota) on February 4, 2010 (see Press Release No. 10/24). The pillars of the program include: (i) fiscal consolidation and institutional reform, including fiscal responsibility legislation and Central Treasury Management; (ii) public debt restructuring, which was completed as a prior action under the program; and (iii) financial sector reform, including to improve consolidated supervision and the regulation of non-banks.
Following the Executive Board discussion on Jamaica, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, made the following statement:
“Overall performance under the Stand-By Arrangement continues to be positive. Inflation is declining more rapidly than projected and ongoing improvement in market confidence has resulted in interest rates falling to their lowest levels in many years. With incipient signs of a recovery, it is projected that growth will turn positive in the second half of the fiscal year.
“Fiscal performance remains on track with all quantitative performance targets met. These are encouraging developments. Continued vigilance is necessary as risks remain, in particular from the uncertain external economic environment, Jamaica’s still high debt level, and its susceptibility to external shocks. Continued expenditure restraint, especially on the wage bill, will be critical to the success of the program, not only for meeting the short-term fiscal targets but also for achieving its objective of ensuring a shared burden of the fiscal adjustment.
“Further progress in structural reforms will be necessary to resolve underlying economic imbalances and strengthen the basis for strong and sustained growth. Good progress was made in a number of areas, including the divestment of the Sugar Company of Jamaica and the completion of action plans for their tax administration and central Treasury management reforms. It will be important to ensure that ongoing plans for public sector rationalization and tax incentives reform will deliver gains in fiscal savings and economic efficiency.
“In the financial sector, reforms aimed at strengthening prudential requirements and the overall supervisory framework are proceeding satisfactorily.”