## 1jamea2023002

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### Executive summary — background and outlook
- Jamaica has strengthened institutions and prioritized macroeconomic stability, enabling adaptation to recent global shocks.
- Policy responses were targeted and temporary during the pandemic and during the war in Ukraine; domestic food and energy prices were allowed to adjust while support targeted the poor.
- The economy is expected to continue its post-COVID recovery, with inflation returning to the central bank’s target range by end-2023.
- Downside risks: potential new COVID waves, higher commodity prices, a global slowdown, and tighter-than-expected global financial conditions.

### Program requests and rationale
- Precautionary and Liquidity Line (PLL)
  - Authorities request a two-year PLL with access of SDR 727.51 million (190 percent of quota) to provide insurance against external risks.
  - Staff assesses Jamaica qualifies for the PLL, performing strongly in three out of five qualification areas and not substantially underperforming in other areas.
  - Authorities plan to treat the PLL as precautionary.
- Resilience and Sustainability Facility (RSF)
  - Authorities request access of SDR 574.35 million (150 percent of quota) under the RSF.
  - RSF objectives: strengthen physical and fiscal resilience to climate change, advance decarbonization, manage transition risks, and catalyze funding from official lenders and the private sector.

### Key macroeconomic findings and projections
- Recent performance and near-term dynamics
  - Tourism rebounded to pre-pandemic levels; FY2022/23 growth expected at 3½ percent despite a prolonged outage in a large alumina plant and negative terms-of-trade shock from the war in Ukraine.
  - Inflation rose above the Bank of Jamaica’s target band of 4-6 percent, receded from its peak aided by tighter fiscal and monetary policy and waning external price shocks.
  - Current account deficit widened due to higher commodity and freight prices, an alumina export shortfall, and moderation in remittances.
  - International reserves about 115 percent of the ARA metric by end-2022; external position broadly in line with medium-term fundamentals and desirable policies.
  - Financial system well capitalized and liquid: DTIs capital adequacy about 14 percent (last September), regulatory minimum 10 percent; NPL ratio 2.5 percent.
  - Public debt on a downward trajectory: overall fiscal balance returned to a surplus in FY2021/22 (0.9 percent of GDP); public debt fell to 94 percent of GDP.
- Medium-term macro framework (Percent of GDP unless otherwise specified)
  - GDP growth: 2019/2020 -0.1; 2020/21 -11.0; 2021/22 8.2; 2022/23 3.5; 2023/24 2.0; 2024/25 1.8; 2025/26 1.7; 2026/27 1.6; 2027/28 1.6
  - Consumer price inflation (e.o.p.): 2019/2020 4.8; 2020/21 5.2; 2021/22 11.3; 2022/23 7.7; 2023/24 5.2; 2024/25 4.5; 2025/26 5.0; 2026/27 5.0; 2027/28 5.0
  - Central government revenue: 2019/2020 30.6; 2020/21 29.5; 2021/22 31.0; 2022/23 29.4; 2023/24 29.4; 2024/25 29.4; 2025/26 29.4; 2026/27 29.5; 2027/28 29.7
  - Central government expenditure: 2019/2020 29.7; 2020/21 32.6; 2021/22 30.1; 2022/23 29.1; 2023/24 29.1; 2024/25 29.1; 2025/26 29.1; 2026/27 27.9; 2027/28 27.0
  - Public sector overall balance: 2019/2020 1.0; 2020/21 -3.6; 2021/22 0.9; 2022/23 0.3; 2023/24 0.3; 2024/25 0.3; 2025/26 1.5; 2026/27 2.5; 2027/28 2.5
  - Central government primary balance: 2019/2020 7.1; 2020/21 3.5; 2021/22 6.8; 2022/23 5.8; 2023/24 5.4; 2024/25 5.2; 2025/26 5.6; 2026/27 5.7; 2027/28 5.3
  - Consolidated public sector debt: 2019/2020 94.3; 2020/21 109.7; 2021/22 94.2; 2022/23 84.1; 2023/24 77.9; 2024/25 74.0; 2025/26 69.8; 2026/27 64.0; 2027/28 59.5
  - Current account: 2019/2020 -1.7; 2020/21 -1.1; 2021/22 -1.2; 2022/23 -2.5; 2023/24 -2.8; 2024/25 -2.5; 2025/26 -2.0; 2026/27 -2.0; 2027/28 -2.0
  - Foreign direct investment: 2019/2020 0.8; 2020/21 1.3; 2021/22 1.9; 2022/23 2.3; 2023/24 2.7; 2024/25 3.0; 2025/26 3.5; 2026/27 3.5; 2027/28 3.5
  - Gross reserves (US$ million): 2019/2020 3,688; 2020/21 4,244; 2021/22 4,324; 2022/23 4,191; 2023/24 4,100; 2024/25 4,250; 2025/26 4,350; 2026/27 4,450; 2027/28 4,550

### Policies under the arrangements
- Fiscal policy
  - Large primary surpluses in the MTFF (around 5½ percent of GDP in coming years) projected to lower public debt to 60 percent of GDP by FY2027/28, in line with the Fiscal Responsibility Law.
  - Measures: strict expenditure control, improved tax administration, buybacks of expensive liabilities, and lengthening maturities.
- Monetary policy
  - Bank of Jamaica increased the policy interest rate to 7 percent by end-2022 (from ½ percent in September 2021), mopped up liquidity, and supported a market-determined exchange rate.
  - Upcoming decisions data dependent and guided by pace of disinflation; authorities stand ready to adjust to secure convergence to the inflation target.
- Public financial management and revenue administration
  - Establish independent Fiscal Commission to assess realism of fiscal plans and consistency with the FRL.
  - Reforms to public wage structure to reduce allowances and standardize pay.
  - New tax administration information system; customs modernization; planned procurement transparency reform to require publication of beneficial ownership information of awarded companies on the Ministry of Finance website.
- Central Bank governance and safeguards
  - Update of safeguards assessment of the Bank of Jamaica underway.
  - Recent amendments to the BoJ Act strengthened autonomy and governance.
  - Scope to strengthen internal audit coverage and introduce an auditor rotation policy.
  - Operational frameworks for potential central bank digital currency being developed.

### Financial sector oversight, resolution, and AML/CFT
- Financial supervision and Basel III
  - Adoption of Basel III standards ongoing: minimum capital requirements and revised regulatory capital definition set; Pillar 2 implementation underway (ICAAP, SREP, D-SIFIs framework).
  - Pillar 3 to focus on market disclosures and additional capital and liquidity requirements.
  - Legislation tabled to allow BoJ to supervise credit unions and subject them to comprehensive prudential requirements.
- Resolution framework and supervisory structure
  - Authorities intend to: (i) establish methodology to identify SIFIs (structural benchmark, September 2023); and (ii) submit a bill to strengthen resolution of non-viable financial institutions (structural benchmark, March 2024).
  - BoJ intensifying supervisory efforts for Financial Holding Companies (FHCs); pilot supervision of first FHC (licensed May 2021) and licensing of a second FHC.
  - Authorities intend amendments to empower FSC for consolidated supervision of non-DTI financial groups (structural benchmark, September 2023).
- AML/CFT framework
  - Jamaica placed under increased monitoring by FATF in February 2020; action plan with 13 action items developed.
  - As of December 2022, seven action items completed; parliament approved Charities Regulation enabling RBS of the NPO sector.
  - Licensing and risk-profiling of micro-credit organizations and TCSP licensing advancing (TCSPs must be licensed by April 2023 or exit).
  - Authorities intend Companies Act amendments to strengthen the beneficial ownership (BO) framework (structural benchmark, March 2023).

### PLL qualification, access, and adverse scenario
- PLL qualification
  - Staff finds Jamaica qualifies for the PLL, performing strongly in three out of five qualification areas.
- PLL access and duration
  - Proposed PLL: two-year duration with access of SDR 727.51 million (190 percent of quota).
- Adverse scenario (combined shocks)
  - Would create an external financing gap of US$ 1. 4 billion.
  - If the PLL is fully drawn: external debt would rise by 6 percent of GDP; reserves would fall by US$425 million, leaving the ARA metric at about 100 percent.
- Box 2 — adverse scenario specific shocks and impacts
  - Oil price shock: 15 percent increase in international oil price relative to the WEO baseline → 15 percent higher fuel imports.
  - Food price shock: 10 percent increase in international food prices → similar increase in food imports.
  - Trading partners: lower growth by 1¼ percentage point → 7 percent lower tourism exports and 5 percent lower remittances.
  - Financial market shocks: VIX rising by 2 standard deviations and interest rates 100 basis points above the baseline → reduce FDI inflows by 25 percent, equity portfolio outflows about 10 percent, decline in rollover rates by 10 percent for MLT loans.
  - Financing implication: adverse scenario financing need about US$1.4 billion; covered by PLL financial support ~US$960 million by end-2024 and use of reserves.

### RSF design, cost estimates, and catalytic effects
- RSF access and objectives
  - Proposed RSF access: SDR 574.35 million (150 percent of quota).
  - RSF pillars: (1) Building Fiscal and Physical Resilience; (2) Strengthening mitigation by increasing energy efficiency and promoting renewable energy; (3) Greening the financial sector.
- Estimated costs and balance-of-payments impact
  - Staff estimated costs of likely climate projects total around US$2.4 billion (about 14 percent of GDP).
  - Text Table 2 totals (USD million):
    - NDC Projects — Energy 976; Transportation 30; Other 47; Total for NDC 1,054
    - Other Climate Projects — Adaptation 160; Water 1,090; Transportation 13; Energy 4; Other 85; Total for Other Climate Projects 1,352
    - Total 2,406
  - Conservative assumption of 50 percent import content → spending would increase current account deficit by around 1 percent of GDP per year during 2024-30, financed by higher FDI and multilateral/private financing catalyzed by the RSF.
- Catalytic effects
  - RSF reforms expected to increase prospects for privately funded investment via incentives for renewables, greening the financial system, and institutional framework for green bonds.
  - World Bank: initial stage of preparation of Development Policy Financing operation in the amount of US$150 million.
  - IDB: country strategy emphasizes developing private sector financing.
  - RSF resources disbursed as budget support and substitute more expensive market financing, improving debt dynamics and lowering overall financing costs.

### Capacity to repay the Fund and risk assessment
- Debt sustainability
  - Debt is sustainable with high probability even in a PLL disbursement scenario.
  - Credit outstanding would reach around 375 percent of quota (225 percent of quota excluding the RSF) or 10 percent of GDP in 2024.
  - Debt service to the Fund, including RSF resources, would peak at SDR 379 million (about 2.4 percent of GDP).
  - Full drawing under the proposed PLL would bring Jamaica’s outstanding use of GRA resources to an amount equivalent to SDR 1.43 billion.
  - The proposed access represents 0.73 percent of total GRA commitments.
  - In a PLL purchase scenario, GRA credit to Jamaica would be equivalent to about 0.78 percent of current GRA credit outstanding (as of July 31, 2022).
  - This represents about 3.5 percent of the Fund’s end-FY2022 precautionary balances.
- Staff assessment
  - Program fully financed (without RSF disbursements) over the next 12 months, with good prospects for the remainder of the program.
  - Risks mitigated by authorities’ commitment to structural reforms, fiscal stance in line with MTFF, and international reserves around 100 percent of the ARA metric.

### Debt profile, DSA, and risk analysis
- Debt statistics and structure
  - External debt: 61 percent of GDP at end of FY2021/22.
  - Share owed to private creditors: 58 percent.
  - Currency composition of external debt: 98 percent denominated in US dollars.
  - Maturity profile of external debt: 35 percent medium term (1-5 years) and 55 percent long-term (over 5 years).
  - Domestic debt (central government): about 35 percent of central government debt.
  - External debt composition (central government basis): multilateral loans 22 percent, bilateral loans 5 percent, international sovereign bonds 38 percent, nonresidents’ holdings of treasury bills and bonds 3 percent.
- Baseline public debt path (percent of GDP)
  - Public debt: 2021: 94.28; 2022: 84.17; 2023: 77.97; 2024: 74.06; 2025: 69.86; 2026: 64.05; 2027: 59.55; 2028: 56.15; 2029: 53.34; 2030: 49.54; 2031: 47.44; 2032: 45.8
- Medium- and long-term risk assessment
  - Medium-term risk: Low (consistent with mechanical signals). Fan chart index score at 1.5, described as moderate.
  - GFN financeability index: score of 6.5, described as low risk (below low-risk threshold of 7.6).
  - Long-term risk: assessed as moderate.
  - Climate-related spending in customized scenario: assumes increase of 0.5 percent of GDP per year for adaptation and mitigation; public debt and GFN increase relative to baseline but remain on a downward trajectory over a 20-year horizon.
- Policy implications from DSA
  - Continue fiscal consolidation, opportunistic liability management operations, reduce reliance on FX-denominated borrowing and develop local currency bond market, and undertake parametric reforms of the public pension system.

### RSF reform measures, timing, and conditionality (selected)
- Pillar 1 — Building Fiscal and Physical Resilience (RM1–RM6)
  - RM1: MOFPS to adopt a National Natural Disaster Risk Financing (DRF) policy. Target Date: 1st PLL Review (End-June 2023)
  - RM2: Development Bank of Jamaica to modify PPP policy to include climate requirements. Target Date: 1st PLL Review (End-March 2023)
  - RM3: PIAB to define methodology to conduct climate impact assessments at project appraisal and incorporate into PIMS handbook. Target Date: 2nd PLL Review (End-Dec. 2023)
  - RM4: PIOJ to define and publish project selection criteria including climate change criteria. Target Date: 2nd PLL Review (End-Dec. 2023)
  - RM5: MOFPS to conduct and publish quantitative analysis of fiscal risks generated by climate change in Fiscal Risk Statement. Target Date: 3rd PLL Review (End-March 2024)
  - RM6: MOFPS to submit amendment to FAA to establish a National Natural Disaster Reserve Fund (NDRF) subaccount and approve financial regulations. Target Date: 2nd PLL Review (End-Dec. 2023)
- Pillar 2 — Strengthening Mitigation/Promoting Renewables (RM7–RM9)
  - RM7: MOFPS to submit bill to incentivize investment in renewables. Target Date: 3rd PLL Review (End-June 2024)
  - RM8: MSET to submit electric vehicles policy to parliament. Target Date: 1st PLL Review (End-June 2023)
  - RM9: MSET to approve guidelines to reduce energy use in schools, hospitals, and public buildings. Target Date: 1st PLL Review (End-June 2023)
- Pillar 3 — Greening the Financial Sector (RM10–RM12)
  - RM10: BOJ to publish a climate risks assessment and define a timeline to embed these risks in supervisory activities. Target Date: 2nd PLL Review (End-Dec. 2023)
  - RM11: Adopt monitoring framework and reporting requirements for CRFR stress testing; integrate climate risks in supervision and macroprudential policy. Target Date: 3rd PLL Review (End-June 2024)
  - RM12: Establish an institutional framework for green-bond issuance and trading. Target Date: 3rd PLL Review (End-June 2024)

### RSF access schedule (Table 8 — availability and conditions)
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 1 implementation
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 2 implementation
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 8 implementation
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 9 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 3 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 4 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 6 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 10 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 5 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 7 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 11 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Condition: Completion of RSF review of reform measures 12 implementation
- Total: 574.35 (Millions of SDR), 150 (Percent of Quota)
- Memorandum item: Quota = 382.90

### Implementation to date — disaster risk financing and mitigation
- DRM institutional framework
  - 2015 DRM Act establishes National Disaster Risks Management Council and ODPEM; establishes National Disaster Fund (NDF).
- Disaster risk financing elements
  - Contingencies Fund ceiling raised from J$100 million (US$652,000) to J$10 billion in 2019 (US$ 65 million).
  - NDF currently capitalized at US$ 2.2 million; historically receives around J$500 million (US$3.2 million) annually.
  - CCRIF coverage in 2021 up to US$ 248.7 million; parametric disbursement within 14 days when modelled loss ≥ attachment point.
  - CAT bond placed July 2021 securing US$185 million of disaster insurance protection.
  - Rapid credit facilities: IDB (US$ 285 million remain available) and IMF’s Rapid Financing Instrument used in emergencies.
- Mitigation and renewables progress
  - LED street lighting: 80 percent replacement reached by 2021; upfront costs ~US$30 million; Caribbean Development Bank TA and US$25 million funding.
  - Low-carbon public buses: 20 buses deployed as of 2021; target 136 buses by 2025; project requires US$30 million financing yet to be secured.
  - National tree planting: about ½ million seedlings planted by end-2021; US$2 million project advancing with pledges for another ¾ million seedlings.
  - Energy projects: EMEP and EECP with funding sources listed (IDB, JICA, EU CIF).

### Priorities going forward — financial sector resilience and climate finance
- Develop green financial instruments and capacity to manage climate-related risks.
- Green bonds: explore issuance to mobilize private financing for climate projects.
- Capacity building and risk monitoring (BOJ, FSC, partnerships)
  - Phase 1 (AFD-funded): build capacity at BOJ and FSC, engage consultant to assess climate-related financial risks, develop monitoring framework and guidance for data and stress testing.
  - Phase 2 (EU CIF-funded): integrate climate risks in supervision and macroprudential policy over next four years, conduct climate-related stress tests.
- Select NDC highlights and costs (Table excerpts)
  - Measure 1: By 2030, deploy 484MW of power from renewable sources (IRP) — Funding Need USD mln 664.86
  - Measure 6: Deploy low-carbon buses — Funding Need USD mln 30.05
  - Measure 10: Tree Planting 3 million — Funding Need USD mln 2.16
  - Various measures and funding needs listed with progress statuses.

### External Economic Stress Index (ESSI) — components and scenarios
- Main external risks captured: dependence on fuel and food imports; de-anchoring of inflation expectations leading to tighter global financial conditions; slowdown in trading partners (Canada, United Kingdom, United States).
- Proxy variables: WEO Commodity Food Price Index/WEO Crude Oil Price Index; interest rate of the 6-month U.S. treasury bond plus the EMBIG spread for Jamaica; VIX; weighted average GDP growth of Canada, UK, and US.
- Weights: Oil prices 0.13; Food prices 0.13; Funding costs 0.07; Volatility 0.05; Trading partner GDP growth 0.62.
- Baseline (October 2022 WEO): external economic stress projected to remain high compared to pre-Covid period.
- Downside scenario assumptions: oil price +15 percent in 2023; food price +10 percent in 2023; funding costs +100 basis points in 2023; VIX +2 standard deviations; trading partners’ growth -1¼ percentage point in 2023 and -½ percentage point in 2024.
- Overall assessment: ESSI suggests external pressures under adverse scenario remain high but projected to soften in 2024—though still above baseline.

### Financing, program structure, and monitoring
- PLL schedule and cumulative access
  - March 1, 2023 — Board approval — Millions SDR, cumulative: 459.48 — Percent of Quota, cumulative: 120 — Percent of total access, cumulative: 63
  - August 31, 2023 — First review — cumulative: 459.48 SDR (120 percent of quota)
  - February 29, 2024 — Second review — cumulative: 727.51 SDR (190 percent of quota)
  - August 31, 2024 — Third review — cumulative: 727.51 SDR (190 percent of quota)
- PLL quantitative targets (indicative)
  - March 31, 2023 — Overall Fiscal Balance (floor): JD 7,506 million; Net International Reserves (floor): US$ 3,535 million
  - Sept. 30, 2023 — Overall Fiscal Balance (floor): JD 3,625 million; Net International Reserves (floor): US$ 3,620 million
- Structural benchmarks (selected, timing)
  - National Statistical Committee / SDDS action plan — March 31, 2023
  - Submit Special Resolution Regime law to parliament — March 31, 2024
  - Publish BOJ methodology to identify SIFIs — September 30, 2023
  - Submit Companies Act amendments on beneficial ownership — March 31, 2023

### Program governance, authorizations, and signatories
- IMF authorized to publish statement, attachments, and staff report.
- Signatories: Nigel Clarke, DPhil., MP — Minister of Finance and the Public Service; Richard Owen Byles — Governor, Bank of Jamaica.
- Review timing (assuming IMF Executive Board approval on March 1, 2023)
  - First review: no later than August 31, 2023
  - Second review: no later than February 29, 2024
  - Third review: no later than August 31, 2024

Italic: International Monetary Fund, Jamaica — Executive Summary and selected excerpts from staff report, February 7, 2023.

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Background and outlook
- Jamaica has strengthened institutions and prioritized macroeconomic stability, enabling adaptation to recent global shocks.
- Policy responses were targeted and temporary during the pandemic and during the war in Ukraine; domestic food and energy prices were allowed to adjust while support targeted the poor.
- The economy is expected to continue its post-COVID recovery, with inflation returning to the central bank’s target range by end-2023.
- Downside risks to the outlook include potential new COVID waves, higher commodity prices, a global slowdown, and tighter-than-expected global financial conditions.

### Program requests and rationale
- Precautionary and Liquidity Line (PLL)
  - Authorities request a two-year PLL with access of SDR 727.51 million (190 percent of quota) to provide insurance against external risks.
  - Staff assesses that Jamaica qualifies for the PLL, performing strongly in three out of five qualification areas and not substantially underperforming in other areas.
  - The authorities plan to treat the PLL as precautionary.
- Resilience and Sustainability Facility (RSF)
  - Authorities request access of SDR 574.35 million (150 percent of quota) under the RSF.
  - The RSF would support strengthening physical and fiscal resilience to climate change, advance decarbonization, and manage transition risks.
  - The RSF is expected to catalyze funding for Jamaica’s climate priorities from other official lenders and the private sector.

### Key macroeconomic findings and projections
- Recent performance and near-term dynamics
  - Tourism has rebounded to pre-pandemic levels; FY2022/23 growth is expected at 3½ percent despite a prolonged outage in a large alumina plant and negative terms of trade shock from the war in Ukraine.
  - Inflation rose above the Bank of Jamaica’s target band of 4-6 percent, receded from its peak last spring aided by tighter fiscal and monetary policy and waning external price shocks.
  - The current account deficit widened due to higher commodity and freight prices, a shortfall in alumina exports, and a moderation in remittances, which more-than-offset tourism improvements.
  - International reserves about 115 percent of the ARA metric by end-2022; external position broadly in line with medium-term fundamentals and desirable policies.
  - Financial system well capitalized and liquid: Deposit Taking Institutions (DTIs) capital adequacy about 14 percent (last September), regulatory minimum 10 percent; NPL ratio 2.5 percent.
  - Public debt on a downward trajectory: overall fiscal balance returned to a surplus in FY2021/22 (0.9 percent of GDP); public debt fell to 94 percent of GDP. Budget execution for first half of FY2022/23 suggests the MTFF surplus target of 0.3 percent of GDP may be exceeded.

- Medium-term macro framework (Percent of GDP unless otherwise specified)
  - GDP growth: 2019/2020 -0.1; 2020/21 -11.0; 2021/22 8.2; 2022/23 3.5; 2023/24 2.0; 2024/25 1.8; 2025/26 1.7; 2026/27 1.6; 2027/28 1.6
  - Consumer price inflation (e.o.p.): 2019/2020 4.8; 2020/21 5.2; 2021/22 11.3; 2022/23 7.7; 2023/24 5.2; 2024/25 4.5; 2025/26 5.0; 2026/27 5.0; 2027/28 5.0
  - Central government revenue: 2019/2020 30.6; 2020/21 29.5; 2021/22 31.0; 2022/23 29.4; 2023/24 29.4; 2024/25 29.4; 2025/26 29.4; 2026/27 29.5; 2027/28 29.7
  - Central government expenditure: 2019/2020 29.7; 2020/21 32.6; 2021/22 30.1; 2022/23 29.1; 2023/24 29.1; 2024/25 29.1; 2025/26 29.1; 2026/27 27.9; 2027/28 27.0
  - Public sector overall balance: 2019/2020 1.0; 2020/21 -3.6; 2021/22 0.9; 2022/23 0.3; 2023/24 0.3; 2024/25 0.3; 2025/26 1.5; 2026/27 2.5; 2027/28 2.5
  - Central government primary balance: 2019/2020 7.1; 2020/21 3.5; 2021/22 6.8; 2022/23 5.8; 2023/24 5.4; 2024/25 5.2; 2025/26 5.6; 2026/27 5.7; 2027/28 5.3
  - Consolidated public sector debt: 2019/2020 94.3; 2020/21 109.7; 2021/22 94.2; 2022/23 84.1; 2023/24 77.9; 2024/25 74.0; 2025/26 69.8; 2026/27 64.0; 2027/28 59.5
  - Current account: 2019/2020 -1.7; 2020/21 -1.1; 2021/22 -1.2; 2022/23 -2.5; 2023/24 -2.8; 2024/25 -2.5; 2025/26 -2.0; 2026/27 -2.0; 2027/28 -2.0
  - Foreign direct investment: 2019/2020 0.8; 2020/21 1.3; 2021/22 1.9; 2022/23 2.3; 2023/24 2.7; 2024/25 3.0; 2025/26 3.5; 2026/27 3.5; 2027/28 3.5
  - Gross reserves (US$ million): 2019/2020 3,688; 2020/21 4,244; 2021/22 4,324; 2022/23 4,191; 2023/24 4,100; 2024/25 4,250; 2025/26 4,350; 2026/27 4,450; 2027/28 4,550

### Policies under the arrangements
- Fiscal policy
  - Large primary surpluses in the MTFF (around 5½ percent of GDP in coming years) are projected to help reduce financing costs, restore fiscal space, and lower public debt to 60 percent of GDP by FY2027/28, in line with the Fiscal Responsibility Law.
  - Fiscal measures include strict expenditure control, improved tax administration, buybacks of expensive liabilities, and lengthening maturities.
- Monetary policy
  - The Bank of Jamaica increased the policy interest rate to 7 percent by end-2022 (from ½ percent in September 2021), mopped up liquidity, and supported a market-determined exchange rate.
  - Upcoming monetary decisions will be data dependent and guided by the pace of disinflation; authorities stand ready to adjust to secure convergence to the inflation target, aided by the prudent fiscal stance.
- Public financial management and revenue administration
  - Establishment of an independent Fiscal Commission to assess realism of fiscal plans and consistency with the FRL.
  - Reforms to public wage structure to reduce allowances and standardize pay; efforts to reward performance and retain skilled employees.
  - A new tax administration information system to improve compliance and data tracking; focus on timeliness of filings and tax arrears reporting.
  - Customs modernization for risk management and post-clearance audits; new Customs Act to enhance clearance and revenue collection.
  - Ongoing PFM work to integrate public bodies into fiscal reporting, strengthen cash management, and improve fiscal risk reporting.
  - Planned procurement transparency reform to require publication of beneficial ownership information of awarded companies on the Ministry of Finance website.
- Central Bank governance and safeguards
  - An update of the safeguards assessment of the Bank of Jamaica (BoJ) is underway.
  - Recent amendments to the BoJ Act strengthened autonomy and governance.
  - Preliminary assessment finds scope to strengthen internal audit coverage and introduce an auditor rotation policy due to long external auditor tenure.
  - Operational frameworks developed to manage potential risks from adoption of a central bank digital currency; issuance has remained limited thus far.

### Financial sector oversight, resolution, and AML/CFT
- Financial supervision and Basel III
  - Adoption of Basel III standards ongoing: minimum capital requirements and revised regulatory capital definition set; Pillar 2 implementation underway (Internal Capital Adequacy Assessment Process, Supervisory Review and Evaluation Process, framework for designating Domestic Systemically Important Financial Institutions—SIFIs).
  - Pillar 3 to focus on market disclosures and additional capital and liquidity requirements.
  - Legislation tabled to allow BoJ to supervise credit unions and subject them to comprehensive prudential requirements.
- Resolution framework and supervisory structure
  - Authorities intend to: (i) establish a methodology to identify SIFIs (structural benchmark, September 2023); and (ii) submit to parliament a bill to strengthen resolution of non-viable financial institutions (structural benchmark, March 2024).
  - BoJ intensifying supervisory efforts for Financial Holding Companies (FHCs); pilot supervision of first FHC (licensed May 2021) and licensing of a second FHC.
  - Authorities intend legislative amendments to empower the Financial Services Commission (FSC) to conduct consolidated supervision of financial groups that do not include DTIs (structural benchmark, September 2023).
  - Authorities are considering a unified regulatory framework under the BoJ for financial oversight; in the short term the FSC will continue to supervise the non-bank financial system.
- AML/CFT framework
  - Jamaica was placed under increased monitoring by FATF in February 2020; an action plan with 13 action items was developed. As of December 2022, Jamaica remained under increased monitoring and FATF extended the deadline for outstanding measures to February 2023.
  - Progress noted: FATF agreed that seven action items have been completed. December 2022 parliament approved Charities Regulation enabling risk-based supervision (RBS) of the NPO sector. Licensing and risk-profiling of micro-credit organizations and placing Trust and Corporate Service Providers (TCSPs) under FSC supervision (TCSPs must be licensed by April 2023 or exit) are advancing.
  - Box 1 summary: Jamaica’s action plan addresses five immediate outcomes (IO1, IO3, IO5, IO7, IO10) from the 2017 Mutual Evaluation. FATF acknowledged progress but noted six actions in IO3, IO5, and IO10 remain incomplete and urged progress before the February 2023 evaluation to avoid further steps in the increased monitoring procedure.
  - Specific recent steps: NRA published August 2021; amendments to Companies Act expected to be tabled before parliament in Q1 2023; BOJ expects to finish processing microcredit institution applications by Q3 2023; FSC engaging prospective TCSP licensees ahead of April 2023 deadlines; placement of the legal profession under AML/CFT pending a Privy Council ruling.

### Program modalities and conditionality
- PLL qualification
  - Staff finds Jamaica qualifies for the PLL, performing strongly in three out of five qualification areas and not substantially underperforming in others.
- PLL access and duration
  - Proposed PLL: two-year duration with access of SDR 727.51 million (190 percent of quota).
- RSF access and objectives
  - Proposed RSF access: SDR 574.35 million (150 percent of quota).
  - RSF supports: accelerate transition to renewable power generation; increase resilience to climate change; enhance climate focus in fiscal policy frameworks; strengthen management of climate risks by financial institutions.
  - RSF expected to catalyze FDI, official lender funding, and private sector climate financing.
- Capacity to repay and related analysis
  - Annexes and tables (listed) include capacity to repay indicators, External Economic Stress Index, Access Considerations Under an Adverse Scenario, Debt Sustainability Analysis, and Building Resilience to Natural Disasters and Climate Change.

### Risks and climate-related considerations
- External risks
  - War in Ukraine could raise global inflation and interest rates, weighing on growth.
  - Stronger-than-envisaged tightening of global financial conditions could curb capital flows, reduce remittances, and raise budget financing costs.
  - New COVID variants could disrupt tourism and trade.
  - Jamaica faces ongoing risks from climate events.
- Climate agenda impacts
  - Climate-related investments expected to increase medium-term growth and the current account deficit (projected to converge to 1.6 percent and 2 percent of GDP, respectively).
  - Investments expected to be financed by FDI and catalyzed climate financing and to lessen long-term macroeconomic vulnerabilities from global energy prices and natural disasters.

*International Monetary Fund, Jamaica — Executive Summary, February 7, 2023.*

### 16.      Finally, in line with the action plan agreed with FATF, the authorities intend to meet

### 16.      Finally, in line with the action plan agreed with FATF, the authorities intend to meet

### Beneficial ownership (BO) and Companies Act amendments
- Authorities intend to meet three action items with parliament’s approval of amendments to the Companies Act to strengthen the BO framework to ensure adequate, accurate and up-to-date beneficial ownership information is available on a timely basis to competent authorities.
- The amendments will:
  - (i) ensure that the definition of BO is amended in line with the international standards endorsed by the FATF;
  - (ii) introduce effective, proportionate, and dissuasive sanctions for legal persons and legal arrangements when they breach their BO obligations;
  - (iii) ensure that the Register of Companies is granted powers to ensure compliance, monitor and verify that basic and BO information held by legal companies is accurate and timely updated (structural benchmark, March 2023).

### Program modalities — PLL qualification: summary assessment
- Jamaica meets qualification requirements for a PLL arrangement; economic fundamentals and institutional policy frameworks are sound.
- Jamaica performs strongly in three out of five PLL qualification areas.

Assessment of specific criteria (selected findings)
- External position and market access:
  - Criterion 1: A sustainable external position.
    - The current account deficit (CAD) has remained below 3 percent of GDP over the last 5 years.
    - FDI flows averaged 3.1 percent of GDP over the same period and more than fully financed the CAD.
    - The 2021 external position is assessed as broadly in line with medium-term fundamentals and desirable policy settings.
    - External debt has been declining since 2015—except for the COVID year—and is expected to continue falling over the medium term.
  - Criterion 2: Capital account dominated by private flows.
    - Between 2017 and 2021, non-government flows represented more than 75 percent of portfolio flows.
    - Foreign direct investment accounts for 50 percent of liabilities; portfolio investment accounts for 25 percent.
  - Criterion 3: Track record of steady sovereign access to international capital markets.
    - Jamaica issued a global bond amounting to US$815 million (158 percent of quota) between 2018 and 2022.
    - Average fiscal surplus about 0.5 percent of GDP over the last five years.
    - Ratings: B+ by S&P and Fitch; B2 by Moody’s.
    - Sovereign spreads are around 200 bps.
  - Criterion 4: Comfortable international reserve position.
    - Over the past three years, reserves averaged 117 percent of the Assessing Reserve Adequacy (ARA) metric and reached 115 percent at end-2022.
    - Reserves have remained well-above 80 percent of the ARA metric and above 5 months of imports since 2017.
- Fiscal policy:
  - Criterion 5: Sustainable public debt and sound public finances.
    - Adoption of the FRL under the Financial Administration and Audit Act with a public debt goal of 60 percent of GDP and a balanced budget rule.
    - Central government debt declined from 142 percent of GDP in 2009/10 to 94 percent of GDP by the end of FY2021/22.
    - Maintaining large primary surpluses in line with the MTFF would lower public debt to 60 percent of GDP by FY 2027/28.
    - Gross financing needs reduced to around 5 percent of GDP.
    - Insurance products mitigate contingent liabilities amounting to about 5 percent of GDP.
- Monetary policy:
  - Criterion 6: Low and stable inflation within a sound framework.
    - Inflation averaged 6.1 percent over 2018–22 (single digits).
    - Policy rate rose from 0.5 percent in September 2021 to seven percent by end-2022.
    - Tight monetary and prudent fiscal policy expected to bring inflation back to the target range by end-2023.
- Financial sector soundness and supervision:
  - Criterion 7: Sound financial system.
    - Capital adequacy of DTIs was about 14 percent (last September), above the regulatory minimum of 10 percent.
    - Sector profitable, well capitalized, and liquid; stress tests suggest resilience to tail events.
  - Criterion 8: Effective financial sector supervision.
    - Adoption of Basel III, risk-based supervision, crisis management and consolidated supervision advancing.
    - Jamaica is on FATF’s list of jurisdictions under increased monitoring; staff proposes conditionality to strengthen resolution of financial institutions and improve AML/CFT framework.
- Data adequacy:
  - Criterion 9: Data transparency and integrity.
    - Jamaica participates in the GDDS since 2003.
    - Improvements ongoing in national accounts, price statistics, government finance statistics, monetary and financial statistics, and balance of payments.
    - Authorities to form a committee of MOF, BOJ, and STATIN to engage with IMF Statistics Department (structural benchmark, March 2023) to identify gaps and develop a roadmap toward subscription to the SDDS (to be incorporated at the first review).
- Institutional strength:
  - Jamaica has relatively good institutional quality with strong WGI scores on Voice and Accountability and Government Effectiveness; Political Stability/Absence of Violence at about the world median.

### PLL access, duration, and adverse scenario
- Gross external financing requirements expected to stabilize at US$2.8 billion by end-2027, to be financed through FDI and medium- and long-term borrowing.
- Barring shocks, gross international reserves expected to remain above 100 percent of the ARA metric.
- Adverse scenario (combined shocks) would create an external financing gap of US$ 1. 4 billion.
- If the PLL is fully drawn:
  - External debt would rise by 6 percent of GDP.
  - Reserves would fall by US$425 million, leaving the ARA metric at about 100 percent.

Box 2 — adverse scenario specific shocks and impacts
- Oil and food price shocks:
  - A 15 percent increase in the international oil price relative to the WEO baseline → 15 percent higher fuel imports.
  - A 10 percent increase in international food prices → similar increase in food imports.
- Trading partners and external receipts:
  - Lower trading partners’ growth by 1¼ percentage point relative to the baseline → 7 percent lower tourism exports and 5 percent lower remittances.
- Financial market shocks:
  - VIX rising by 2 standard deviations and interest rates 100 basis points above the baseline.
  - These would reduce FDI inflows by 25 percent, generate equity portfolio outflows of about 10 percent, and a decline in rollover rates by 10 percent for MLT loans.
- Financing implications:
  - The adverse scenario would give rise to a financing need of about US$1.4 billion.
  - This would be covered by financial support under the PLL for about US$960 million by the end of 2024 (equivalent to 190 percent of the quota) and use of reserves placing the ARA metric at around 100 percent.

### PLL request and program modalities
- Authorities request a 2-year PLL arrangement with access of SDR 727.51 million (or 190 percent of quota).
- Structural benchmarks will focus on: improvements in crisis management; supervision of financial conglomerates; improvements in the AML/CFT framework; and developing a roadmap for SDDS subscription.
- Indicative targets proposed for the public sector fiscal balance and for NIR.
- Authorities intend the PLL to be precautionary; Jamaica expected to be in a strong position to exit the PLL by end-2024 as external risks subside.

### Resilience and Sustainability Facility (RSF) — climate and disaster risks
- Climate-related impacts and vulnerabilities:
  - Historical damages: two hurricanes in the early 2000s caused cumulative losses of 11 percent of GDP.
  - For a one-in-100-year event, fiscal losses could exceed 10 percent of GDP (Annex III).
  - Tourism provides about 20 percent of GDP in FX inflows and is highly sensitive to natural disasters.
  - Jamaica depends on fossil fuel imports for over 85 percent of electricity generation.
- Policy and planning:
  - National Development Plan, energy sector plan, water sector strategy, NDC, Disaster Management Program, social safety net and financing framework are in place or under development.
  - Authorities developing a National Adaptation Plan and a strategy for Low Carbon Emissions and Climate Resilient Development.
- RSF collaboration and aims:
  - RSF measures identified in collaboration with the WB and IDB; collaboration began in September 2022.
  - RSF expected to coordinate strategic climate objectives and identify TA to support implementation.
- RSF reform agenda — three pillars:
  - Pillar 1: Building Fiscal and Physical Resilience to Natural Disasters and Climate Change.
    - Develop a National Natural Disaster Risk Financing Policy and improved fiscal policy frameworks.
    - Methodologies and tools to incorporate climate-related risks into fiscal policy documents.
    - Strengthen financing instruments for post-disaster recovery and establish a National Natural Disaster Reserve Fund (NDRF) for catastrophic events (to be defined in the Financial Administration and Audit Act).
    - Incorporate climate considerations into project appraisal and selection; amend PPP framework to include climate requirements.
  - Pillar 2: Strengthening mitigation by increasing energy efficiency and promoting renewable energy.
    - Policy framework implies about 80 percent of emission reductions will come from ramp up of renewable electricity generation and improvements in energy efficiency.
    - Submit to parliament a bill to provide fiscal incentives for investments in renewables.
    - Submit to parliament a comprehensive electric vehicle policy.
    - Broaden energy efficiency guidelines for public buildings building on existing programs.
  - Pillar 3: Greening the financial sector.
    - Strengthen data collection and data-based risk management for climate-related risk reporting and assessment.
    - BOJ to publish a climate risks assessment and define a timeline to incorporate climate considerations into supervisory activities.
    - Adopt a monitoring framework for Climate Related Financial Risks stress testing and establish reporting requirements for financial institutions.
    - Develop an institutional framework for green-bond issuance and trading to mobilize private climate finance.

*Source: IMF staff report excerpt.*

### 27.      In support of their home-grown reform agenda, the authorities have requested access

### 27. In support of their home-grown reform agenda, the authorities have requested access

### RSF request and arrangement design
- Authorities have requested access to SDR574.35 million (150 percent of quota) under the RSF.
- Jamaica is eligible for RSF financing.
- The RSF arrangement is proposed to coincide with the 24-month PLL arrangement, with RSF disbursements aligned with the PLL’s semi-annual reviews.
- Staff assesses the access level is justified by:
  - the strength and ambition of RSF-supported measures;
  - the balance of payments impact associated with the implementation of this reform agenda;
  - an adequate capacity to repay the Fund.

### Strength of the reform agenda (objectives and measures)
- RSF-supported reforms aim to reduce long-term vulnerabilities of the external position and build policy space and buffers to insure against risks from climate change.
- Reform measures 1–6:
  - enhancements to the fiscal framework to manage climate events;
  - facilitate investment in climate-related projects;
  - take better account of climate risks in fiscal decisions;
  - instrumental to foster investments to enhance adaptation to climate change.
- Reform measures 7–9:
  - increase renewables and curb energy use to reduce dependence on energy imports and achieve the NDC’s emission reduction targets;
  - potential to increase generation through renewable sources;
  - expand the electric vehicle share in both the private fleet and public transportation;
  - reduce energy consumption in public buildings; contribute to decarbonizing the Jamaican economy.
- Reform measures 10–12:
  - help manage transition risks in the financial sector;
  - incentivize private climate financing.

### Balance of payments impact and cost estimates
- Staff estimated costs of the likely climate projects total around US$2.4 billion (about 14 percent of GDP).
- Text Table 2. Jamaica: Cost of Climate-Related Projects (In USD million)
  - NDC Projects
    - Energy 976
    - Transportation 30
    - Other 47
    - Total for NDC 1,054
  - Other Climate Projects
    - Adaptation 160
    - Water 1,090
    - Transportation 13
    - Energy 4
    - Other 85
    - Total for Other Climate Projects 1,352
  - Total 2,406
- A conservative assumption of 50 percent import content would mean this spending would increase the current account deficit by around 1 percent of GDP per year during 2024-30, financed by higher FDI and the multilateral and private financing expected to be catalyzed by the RSF.

### Catalytic effects on private and official financing
- RSF-supported reforms are expected to increase prospects for privately funded investment by:
  - providing incentives for investments in renewables;
  - greening the financial system through enhancements in the management of climate risks by regulators/financial institutions;
  - improving the institutional framework for green bonds to increase private inflows.
- Improvements to policy frameworks (management of natural disasters, assessment of climate risks, PPP frameworks) will facilitate development partners’ financing and foster investor confidence.
- The Fund’s Climate Finance Working Group continues to engage with authorities, development partners and the private sector to explore additional ways to leverage the RSF to catalyze private climate financing.
- Discussions with bilateral donors suggest greater coordination through the RSF could expand the envelope for official flows by identifying financing needs; the authorities are working with partners to define a framework for official climate financing.
- World Bank: at the initial stage of preparation of a Development Policy Financing operation in the amount of US$150 million.
- IDB country strategy for Jamaica for the next five years places particular focus on developing private sector financing.
- RSF resources will be disbursed as budget support and substitute more expensive market financing, improving debt dynamics and lowering overall financing costs.

### Capacity to repay the Fund and risk assessment
- Debt is sustainable with high probability even in a PLL disbursement scenario.
- Jamaica’s track record meeting obligations to the Fund, adequate buffers, strong policies, and credible policy frameworks mitigate risks.
- Debt outstanding and debt service to the IMF in a PLL purchase scenario:
  - credit outstanding would reach around 375 percent of quota (225 percent of quota excluding the RSF) or 10 percent of GDP in 2024.
  - debt service to the Fund, including resources drawn under the RSF, would peak at SDR 379 million (about 2.4 percent of GDP).
- Jamaica’s largest peaks for both credit outstanding (as percent of GDP) and debt service to the Fund with RST resources are at the 75th percentile of comparators.
- Over the longer term, risks are mitigated by:
  - authorities’ strong commitment to structural reforms;
  - a fiscal stance in line with the MTFF;
  - international reserves remaining at around 100 percent of the ARA metric in the projection period.
- The program is fully financed (without RSF disbursements) over the next 12 months, with good prospects for the remainder of the program.
- Full drawing under the proposed PLL would bring Jamaica’s outstanding use of GRA resources to an amount equivalent to SDR 1.43 billion.
- The proposed access represents 0.73 percent of total GRA commitments.
- In a PLL purchase scenario, GRA credit to Jamaica would be equivalent to about 0.78 percent of current GRA credit outstanding (as of July 31, 2022).
- This represents about 3.5 percent of the Fund’s end-FY2022 precautionary balances.

### Staff appraisal and PLL support
- Recovery and macro conditions:
  - Jamaica’s track record of building institutions and prioritizing macroeconomic stability has aided the post-pandemic recovery.
  - The recovery is supported by a rebound in tourism.
  - Inflation is expected to converge to the BOJ target range by end-2023.
  - The external position is solid, the country has adequate levels of international reserves, and the financial sector remains well-capitalized and liquid.
  - The post-pandemic increase in the primary surplus and the ongoing monetary tightening reduce inflation and underscore Jamaica’s commitment to debt sustainability.
- Policy framework enhancements:
  - Fiscal Commission will strengthen the fiscal responsibility framework.
  - Public sector reforms will create a standardized and equitable pay structure for government employees that rewards performance.
  - Efforts to strengthen tax and customs administration will support the revenue envelope.
  - Amendments to the BOJ Act have strengthened the central bank’s autonomy and governance.
  - Progress is being made in the adoption of the Basel III framework and enhancement of oversight of the financial system.
- Staff supports Jamaica’s request for access of SDR727.51 million (190 percent of quota) under a 2-year PLL.
  - Jamaica performs strongly in three out of the five qualification areas, meeting requirements for a PLL.
  - The arrangement will provide insurance against risks from higher commodity prices, a global slowdown, tighter-than-envisaged global financial conditions, and new COVID outbreaks.
- PLL priorities:
  - improve financial supervision;
  - strengthen the AML/CFT framework;
  - improve data reporting and data transparency to achieve SDDS subscription;
  - support legislative efforts to improve the resolution regime for non-viable financial institutions and ensure consolidated supervision of large financial conglomerates;
  - prioritize improving transparency of beneficial ownership regime, in line with the action plan agreed with FATF;
  - capacity development support to strengthen data transparency and integrity.

### Climate change commitment
- Jamaica is steadfastly committed to addressing climate change vulnerabilities.
- The National Development Plan provides the framework for climate initiatives.
- The Nationally Determined Contribution outlines a broad-based strategy for adaptation and mitigation, including ambitious objectives in transitioning to renewables.

*Source: Excerpt from the provided IMF chapter text.*

### 38.       Staff supports   Jamaica’s request for access of SDR574.35 million (150 percent of

### 1jamea2023002 - 38.       Staff supports   Jamaica’s request for access of SDR574.35 million (150 percent of quota) under the RSF

### RSF request and objectives
- Staff supports Jamaica’s request for access of SDR574.35 million (150 percent of quota) under the RSF.
- RSF goals:
  - strengthen physical and fiscal resilience to climate change,
  - create incentives to switch to renewables and to reduce energy consumption,
  - develop new markets for green financial instruments,
  - require financial intermediaries to properly manage climate risks.
- Expected RSF outcomes:
  - help reduce vulnerabilities,
  - catalyze private and official financing for climate-related investment.

### Proposed RSF access schedule and conditions (Table 8)
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 1 implementation
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 2 implementation
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 8 implementation
- Availability Date: August 31, 2023 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 9 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 3 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 4 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 6 implementation
- Availability Date: February 29, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 10 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 5 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 7 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 11 implementation
- Availability Date: August 31, 2024 — Millions of SDR: 47.86 — Percent of Quota: 12.50 — Conditions for Access: Completion of RSF review of reform measures 12 implementation
- Total: 574.35 (Millions of SDR), 150 (Percent of Quota)
- Memorandum item: Quota = 382.90

### Program credit and capacity-to-repay context (selected items from Tables 6 & 8)
- Proposed access under RSF (total): SDR574.35 million = 150 percent of quota.
- Outstanding IMF Credit (based on existing and prospective drawings) projection highlights:
  - Outstanding IMF Credit, Millions of SDR: 558.4; 1,031.9; 1,435.4; 1,311.3; 1,129.6; 799.3; 607.9; 574.4; 574.4; 574.4; 574.4; 574.4; 574.4; 545.6; 488.2; 430.8; 373.3; 315.9; 258.5; 201.0; 143.6; 86.2; 28.7; 0.0 (selected series as presented).
  - Percent of quota for Outstanding IMF Credit series: 145.8; 269.5; 374.9; 342.5; 295.0; 208.7; 158.7; 150.0; 150.0; 150.0; 150.0; 150.0; 142.5; 127.5; 112.5; 97.5; 82.5; 67.5; 52.5; 37.5; 22.5; 7.5; 0.0.
- Total Obligations Based on Existing and Prospective Credit (Millions of SDR): 18.82; 228.73; 314.61; 186.22; 238.73; 378.52; 228.86; 66.43; 32.53; 32.53; 32.63; 32.56; 60.98; 88.18; 86.18; 84.18; 82.18; 80.27; 78.27; 76.27; 74.27; 72.34; 2.0 (series as presented).
- Percent of exports of goods and services for Total Obligations series: 0.4; 4.7; 6.1; 3.4; 4.2; 6.3; 4.4; 1.3; 0.6; 0.6; 0.6; 0.6; 1.1; 1.5; 1.5; 1.4; 1.4; 1.3; 1.3; 1.2; 1.2; 1.1; 0.6.

### Macroeconomic and sectoral developments (figures and tables summary)
- Real sector:
  - After the massive contraction in 2020, the economy is slowly gaining momentum.
  - Unemployment has fallen to historic lows (Unemployment rate (July 2022): 6.6%).
  - Tourism and hospitality industry have rebounded; most sectors have picked up, except mining.
  - Output gap is closing; inflation, while receding, remains above the target band.
- Fiscal sector (Figures and Tables 1a/1b, 2a/2b):
  - Central government fiscal balance is back in surplus.
  - Budgetary revenue (percent of GDP): 30.6 (2019/20); 29.5 (2020/21); 31.0 (2021/22); 29.4 (2022/23); projections of 29.4 onward.
  - Tax revenue (percent of GDP): 27.3 (2019/20); 25.9 (2020/21); 26.5 (2021/22); 26.4 (2022/23).
  - Budgetary expenditure (percent of GDP): 29.7 (2019/20); 32.6 (2020/21); 30.1 (2021/22); 29.1 (2022/23).
  - Interest payments (percent of GDP): 6.2 (2019/20); 6.6 (2020/21); 5.9 (2021/22); 5.5 (2022/23).
  - Public debt (FRL definition, percent of GDP): 94.3 (2019/20); 109.7 (2020/21); 94.2 (2021/22); 84.1 (2022/23); projections include 77.9; 74.0; 69.8; 64.0; 59.5.
  - Fiscal-year nominal GDP (J$ billions): 2,121 (2019/20); 1,949 (2020/21); 2,322 (2021/22); 2,588 (2022/23).
- External sector (Table 3, Figure 3):
  - Current Account balance (US$ millions): -261 (2019/20); -149 (2020/21); -176 (2021/22); -418 (2022/23); -504 (2023/24).
  - Trade balance (US$ millions): -3,914 (2019/20); -2,742 (2020/21); -3,332 (2021/22); -4,537 (2022/23); -4,573 (2023/24).
  - Exports (f.o.b., US$ millions): 1,531 (2019/20); 1,253 (2020/21); 1,421 (2021/22); 1,671 (2022/23); 1,749 (2023/24).
  - Imports (f.o.b., US$ millions): 5,445 (2019/20); 3,995 (2020/21); 4,753 (2021/22); 6,208 (2022/23); 6,322 (2023/24).
  - Remittances/Secondary income (US$ millions): 2,423 (2019/20); 3,200 (2020/21); 3,556 (2021/22); 3,453 (2022/23); 3,208 (2023/24).
  - Gross international reserves (US$ millions): 3,688 (2019/20); 4,244 (2020/21); 4,324 (2021/22); 4,191 (2022/23); 4,100 (2023/24).
- Monetary and financial sector (Figure 4, Tables 4 & 5):
  - Banking system deposits have been growing steadily; individual and businesses dominating.
  - Private credit continues to grow reflecting post-Covid rebound.
  - Depository Institutions retain liquidity above required minimum with moderate profitability.
  - NPL ratio is very low with sufficient provisioning.
  - Capital buffers are kept well above the minimum.
  - Broad Money (M3, J$ billions): 1,260.5 (2019/20); 1,449.8 (2020/21); 1,634.8 (2021/22); 1,769.7 (2022/23); 1,893.9 (2023/24).
  - Credit to private sector (J$ billions): 1,039.1 (2019/20); 1,125.3 (2020/21); 1,227.5 (2021/22); 1,336.7 (2022/23); 1,441.0 (2023/24).
  - Capital Adequacy Ratio (CAR): 18.8 (2009); 18.2 (2010); 16.1 (2011); various years reporting values around 14.0–15.3 in later years; recent CAR values include 14.0; 14.1; 13.8 (presented series).
  - NPLs/loans: 4.7 (2009); 6.5 (2010); 8.9 (2011); recent values: 2.7; 2.5; 2.8; 2.9; 2.8; 2.7; 2.5.
- Key macro projections (Table 1a, fiscal-year basis):
  - Real GDP (annual percent change): -0.1 (2019/20); -11.0 (2020/21); 8.2 (2021/22); 3.5 (2022/23); 2.0 (2023/24); 1.8 (2024/25); 1.7 (2025/26); 1.6 (2026/27); 1.6 (2027/28).
  - Consumer price index (end of period): 4.8 (2019/20); 5.2 (2020/21); 11.3 (2021/22); 7.7 (2022/23); 5.2 (2023/24); 4.5 (2024/25); 5.0 (2025/26); 5.0 (2026/27); 5.0 (2027/28).
  - Nominal GDP (annual percent change): 3.3 (2019/20); -8.1 (2020/21); 19.2 (2021/22); 11.5 (2022/23); 7.3 (2023/24); 6.4 (2024/25); 6.8 (2025/26); 6.7 (2026/27); 6.7 (2027/28).

### Financing, program structure, and related PLL schedule (Table 7)
- PLL (Precautionary and Liquidity Line) arrangement schedule and cumulative access:
  - March 1, 2023 — Board approval of the PLL — Millions SDR, cumulative: 459.48 — Percent of Quota, cumulative: 120 — Percent of total access, cumulative: 63
  - August 31, 2023 — First review based on March 31, 2023 quantitative targets — Millions SDR, cumulative: 459.48 — Percent of Quota, cumulative: 120 — Percent of total access, cumulative: 63
  - February 29, 2024 — Second review based on September 30, 2023 quantitative targets — Millions SDR, cumulative: 727.51 — Percent of Quota, cumulative: 190 — Percent of total access, cumulative: 100
  - August 31, 2024 — Third review based on March 31, 2024 quantitative targets — Millions SDR, cumulative: 727.51 — Percent of Quota, cumulative: 190 — Percent of total access, cumulative: 100

### Selected institutional and country profile items (Table 1a / 1b)
- Population (2019): 2.73 million
- Per capita GDP (2019): US$5729
- Quota (current; millions SDRs): 382.9
- Literacy rate (2015)/Poverty rate (2017): 87%/12.6%
- Main products and exports: Alumina, tourism, chemicals, mineral fuels, bauxite
- Unemployment rate (July 2022): 6.6%

*Source: IMF staff estimates and projections; Jamaican authorities (content as provided).*

### Annex I. External Economic Stress Index

### Annex I. External Economic Stress Index

### Background
- The External Economic Stress Index (ESSI) seeks to capture the evolution of the external environment faced by a country.
- The index is based on a selection of: (i) key external risks facing Jamaica; (ii) proxy variables capturing these risks; and (iii) weights to apply to each of these variables.

### Main external risks for Jamaica
- Dependence on fuel and food imports, exposing Jamaica to commodity price volatility.
- De-anchoring of inflation expectations in advanced economies that leads to tighter-than envisaged global financial conditions, restricting external financing to EMDEs.
- A growth slowdown in advanced economies, including Jamaica’s main trading partners—Canada, United Kingdom, and United States—which could reduce remittances receipts, FDI inflows, and exports.

### Proxy variables used in the ESSI
- Higher imports: international food and oil prices (WEO Commodity Food Price Index/WEO Crude Oil Price Index).
- Tighter monetary conditions: interest rate of the 6-month U.S. treasury bond plus the EMBIG spread for Jamaica.
- Global financial market volatility: VIX.
- Trading partner growth: weighted average of GDP growth of Canada, United Kingdom, and United States.

### Weights (data-based, estimated using size of related balance of payment items between 2012 and 2020)
- Oil prices: 0.13 (weight determined by value of fuel imports).
- Food prices: 0.13 (weight determined by value of consumer goods imports).
- Funding costs: 0.07 (value of portfolio inflows is used).
- Volatility: 0.05 (value of other investments is used).
- Trading partner GDP growth: 0.62 (based on Jamaica’s exports, remittances, and FDI).

### Baseline scenario (October 2022 WEO projections)
- The index shows that external economic stress is projected to remain high compared to the pre-Covid period.
- Drivers: higher food and oil price path assumptions, higher projected interest rates, and a slowdown in trading partners growth.

### Downside scenario (aligned with the October 2022 WEO global downside scenario)
- Composition:
  - Impact on fuel and food prices from the war in Ukraine.
  - Larger-than-envisaged financial tightening due to inflationary pressures.
  - Lower global GDP growth.
- Commodity shocks:
  - Supply shocks increase global oil prices by 15 percent compared to the baseline in 2023.
  - Supply shocks increase global food prices by 10 percent compared to the baseline in 2023.
  - These shocks gradually begin to dissipate in 2024.
- Financial markets assumptions:
  - Funding costs increase by 100 basis points in 2023, beginning to dissipate in 2024 (though in a context of sustained volatility).
  - VIX increases by two standard deviations in 2023.
- Trading partners growth:
  - In 2023, trading partners’ growth is about 1¼ percent below the baseline.
  - In 2024, trading partners’ growth is about ½ percent below the baseline.
  - The shock begins to dissipate in 2024.

### Overall assessment
- The ESSI suggests that external pressures under the adverse scenario remain high but are projected to soften, particularly in 2024—though still above the baseline.

*Source: Annex I. External Economic Stress Index (from the provided IMF Jamaica staff report content).*

### 8. Implementation to Date. Jamaica has made progress in addressing natural disasters and

### 8. Implementation to Date.

### Institutional framework and disaster management instruments
- The 2015 Disaster Risk Management (DRM) Act:
  - Establishes the National Disaster Risks Management Council, chaired by the Prime Minister.
  - Establishes the Office of Disaster Preparedness and Emergency Management (ODPEM) in the Ministry of Local Government and Development as the executive arm coordinating integrated disaster preparedness and management systems.
  - Establishes the National Disaster Fund (NDF), managed by ODPEM, to be used for upgrading and maintenance of resilient infrastructure, as well as provincial-level lower impact disasters.
- Comprehensive Disaster Management program (CDM), directed by ODPEM, comprises:
  - (i) activities to minimize damage and amplify relief response;
  - (ii) recovery and rehabilitation plans;
  - (iii) a mitigation phase for structural and non-structural measures to limit adverse impacts.
- Social safety nets and institutional response:
  - Social safety net is fairly developed and allows for quick humanitarian response after natural disasters.
  - During COVID, Jamaica demonstrated sound procedures and relatively efficient institutions in providing population support.

### Public financial management and disaster risk financing framework
- November 2018: Cabinet approved a Public Financial Management (PFM) policy framework for natural disaster risk financing to:
  - Bolster financial resilience for swift and cost-effective responses;
  - Minimize budget reallocations and protect fiscal balance;
  - Identify, monitor, and mitigate contingent liabilities associated with PPPs and fiscal risks due to natural disasters.
- Comprehensive financing framework elements:
  - (i) Contingencies Fund:
    - Established under the Constitution and operationalized in Section 13 of the FAA to provide for unforeseen expenditure, including disasters.
    - Aggregate ceiling raised from J$100 million (US$652,000) to J$10 billion in 2019 (US$ 65 million) to provide space for natural-disaster risk coverage.
  - (ii) National Disaster Fund (NDF):
    - Established under Part IX of the DRM Act for projects that mitigate, prevent, prepare for, respond to, and recover from emergencies and disasters and to provide financial assistance to households.
    - Currently capitalized at US$ 2.2 million and has historically received an annual injection of around J$500 million (US$3.2 million).
    - Authorities considering shifting NDF focus to local events and emphasizing ex-ante use of the Fund.
  - (iii) Caribbean Catastrophic Risk Insurance Facility (CCRIF):
    - Regional parametric insurance platform; annual CCRIF insurance premia mostly financed through the budget with GOJ contributing an over-time increasing share.
    - In 2021, insured hazards were earthquakes, tropical cyclones, and floods, with coverage up to US$ 248.7 million.
    - CCRIF can disburse funds within 14 days of an event when modelled loss equals or exceeds the policy attachment point.
  - (iv) Catastrophe bond (CAT bond):
    - Jamaica is the first small island state to independently sponsor a CAT bond under the World Bank’s Capital-At-Risk notes program.
    - Bond placed in July 2021, securing US$185 million of disaster insurance protection from capital markets.
  - (v) Rapid credit facilities:
    - Liquidity needs have been met through IFIs, including by relying on the IDB (US$ 285 million remain available) and the IMF’s Rapid Financing Instrument.

### Transparency, accountability, and public investment management
- Budget tracking and guidelines:
  - Budget program—disaster management—allows tracking of disaster-related expenditures by budget units (usage not yet uniform across agencies).
  - 2019 MOFPS post-disaster budget execution guidelines issued to ensure proper and timely access and allocation of funds after disasters; guidelines specify instruments, disbursement modalities, and financial procedures in accordance with disaster-related legislation and the Financial Administration and Audit Act.
  - MOFPS planning to adopt climate budget tagging with IDB support.
- Green and resilient public investments:
  - Sectoral plans align with NDC objectives and Vision 2030 Jamaica framework.
  - 2018 Building Act and National Building Code adopted in 2018, came into operation in January 2019; Code comprises the International Building Code (IBC) and eleven documents describing standards of specification to resist extreme weather events and improve energy efficiency in public buildings.
  - Many settlements remain outside formal planning systems and likely do not meet building standards.
  - Government initiated a Green Coastal Urban Renewal plan focusing on waterfront renewal, coastal revetments and sea walls, and relocation of vulnerable communities.

### Strengthening mitigation and promoting renewables — Implementation to date
- LED street lighting:
  - Target to replace streetlights with energy efficient LED; in 2021 replacement reached 80 percent of streetlights.
  - Upfront costs of some US$30 million; Caribbean Development Bank provided TA and US$25 million funding.
- Low-carbon public buses (2020-2025) in Montego Bay and St. James Parish:
  - 20 buses deployed as of 2021.
  - By 2025, 136 buses are to be in service.
  - Project requires US$30 million financing yet to be secured plus financing for supportive infrastructure; project supported by IDB’s TA.
- National Tree Planting:
  - About ½ million seedlings planted by end-2021.
  - US$2 million project advancing with pledges to plant another ¾ million seedlings; further private sector and/or international sponsorship needed.
- Externally funded energy projects:
  - Energy Efficiency & Conservation Program (EECP) supported retrofitting government facilities; concluded in 2018.
  - Energy Management and Efficiency Programme in Jamaica (EMEP) promotes energy efficiency and conservation; EMEP Urban Traffic Management System launched in May 2021 to ease urban mobility and raise fuel efficiency in Kingston Metropolitan Area, Spanish Town, and Portmore.
  - Funding sources referenced for EMEP: IDB energy loan (US$15 million), Japan International Cooperation Agency (US$15 million), European Union Caribbean Investment Facility (US$ 10 million tbd). Energy Efficiency allocation US$22.8 million, Urban Traffic US$3.43 million.

### Strengthening mitigation and promoting renewables — Priorities going forward
- Attract private sector investment for transition to renewables and increase efficiency across generation, transmission, and consumption.
- Incentives for investment in renewables:
  - Plan to develop Electricity Sector Act legislation to incentivize renewables through fiscal measures like feebates or support for renewables.
  - Instrumental to achieve target of about half of electriciy generation from renewables by 2030.
- Electric vehicles:
  - Cabinet approved Strategic framework for electric mobility developed with IDB.
  - Authorities intend to develop an electric vehicle policy to set functional standards, energy sector guidelines, operational codes, and ecosystem development guidelines.
  - Measures could result in electric vehicles rising to about 12 percent of total privately-owned fleet, 16 percent of public transport, and savings of 3 MTCO2eq over the next decade.
  - Fiscal impact estimated to be largely neutral as early incentives are balanced by later gains in tax collection; economy-wide and socio-financial impacts estimated as positive.
- Energy efficiency measures:
  - Policies to reduce theft of streetlights, replace lightbulbs in schools and hospitals with low energy alternatives, and secure inventory of energy-efficient lightbulbs.
  - New reporting, monitoring, and evaluation procedures to ensure efficient application of replacement process.
  - Potential measures to extend energy conservation programs to the private sector through incentives to replace air-conditioning equipment with heat exchange units and other green technology.
  - Past program impacts:
    - Energy Efficiency and Conservation Program (2012–2016) estimated to have saved some JD131.5 million (US$1 million).
    - Subsequent program (2017–2021) estimated to have saved more than 0.6 million barrels of oil (equivalent to 8 percent of total crude volume imported in 2020) by equipping 30 public facilities with energy efficient systems.
  - A ban on incandescent light bulbs is to take effect from April 1, 2023.

### Greening the financial sector — Implementation to date
- Central Bank of Jamaica (BOJ) actions:
  - In 2022 BOJ joined the International Sustainable Banking and Finance Network (SBFN) to develop capacity to monitor climate change risks in line with best practices.
  - BOJ engaged by the Basel Consultative Group to participate in its proportionality workstream to expedite adoption of supervision of climate adaptation risks.
  - BOJ is a member of the Association of Supervisors of Banks of the Americas and will consider becoming a member of the Network for Greening the Financial System (NGFS).
- Financial Services Commission (FSC) initiatives:
  - At end-2021, FSC adopted a risk-based supervision framework recognizing the importance of accounting for climate-related risks.
  - FSC encourages licensees and registrants to adopt recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
  - FSC expects financial institutions to have frameworks to factor governance, strategy, risk management, and metrics and targets related to climate risk issues.

*Excerpt from: 1jamea2023002 — Jamaica (INTERNATIONAL MONETARY FUND).*

### 13. Priorities Going Forward. The authorities plan to develop green financial instruments and

### 13. Priorities Going Forward

### Strategic priorities for financial sector resilience and climate finance
- Develop green financial instruments and the capacity for management of climate-related risks to enhance financial sector resilience and scale up climate financing.
- Critical elements:
  - Allocation of adequate resources and building of internal capacity for supervision of climate risks.
  - Setting expectations (guidelines) for financial institutions on governance and strategy, risk management, scenario analysis and stress testing, and disclosure of climate-risks.
  - Improvements in data collection from financial institutions to better monitor their exposure to climate-related risks.

### Green bonds
- Authorities intend to develop a green bond market to mobilize private sector financing for climate adaptation and emission reduction projects.
- Policy/implementation considerations:
  - Bonds would signal commitment to address climate change and may catalyze other financing.
  - Authorities will assess convenience of issuance at an early stage in reform adoption or when conceptualization reaches maturity.
  - Early issuance could lock in private sector interest and signal authorities’ commitment.

### Capacity building and risk monitoring (BOJ, FSC, partnerships)
- The Bank of Jamaica (BOJ) will build capacity to monitor climate change risks in the financial system; current data on exposure to climate-related risks is insufficient.
- BOJ recognizes domestic financial institutions are vulnerable through lending to climate-exposed sectors.
- BOJ engagement and guidance:
  - BOJ has benefitted from Basel Committee on Banking Supervision guidance on additional buffers needed to mitigate against climate related risks.
  - BOJ partnered with Agence Française de Développement (AFD) to green the Jamaican Financial System. The project comprises two phases with funding provided by the AFD (phase 1) and the European Union Caribbean Investment Fund (CIF) (phase 2).

- Phase 1 (AFD-funded) — main activities:
  - Build capacity at the BOJ and the FSC to incorporate Climate-Related Financial Risks (CRFR) into risk-based supervision, risk monitoring, and evaluation practices.
  - BOJ will engage a consultant to assess the climate-related financial risks.
  - Consultant’s report will outline national policies/regulatory framework and provide a diagnostic of climate risk considerations in the Jamaican financial system.
  - Adoption of a monitoring framework, including identification of key risks and related monitorable indicators.
  - Development of detailed guidance on data required to measure exposures and conduct stress tests.
  - Completion of a report outlining recommendations for implementation of climate stress testing, and the governance and regulatory regime in the Jamaican financial system.

- Phase 2 (EU CIF-funded) — focus and timeline:
  - With completion of reform measures 11 and 12 the foundations for monitoring climate change risks will be established.
  - Phase 2 will focus on integration of climate risks in supervision and macroprudential policy formulation, expected to continue over the next four years.
  - Activities include conducting climate-related stress tests, developing a monitoring framework to manage risks, and building capacity at the BOJ and the FSC for on-going assessment of climate-related risks.

### Select NDC (2020–2030) highlights (Table 1: Jamaica: NDC (2020–2030) at a Glance)
- Measure 1: By 2030, deploy 484MW of power from renewable sources (IRP)
  - Start 2019, End 2030, Share of 2030 21 (in percent), Funding Need USD mln 664.86, Secured Partial, Source Power Producers, Gender Impact Neutral, Progress Ongoing
- Measure 2: Allow self-generators selling to the grid (Net billing Facility)
  - Start 2013, End 2020, Share of 2030 0.5 (in percent), Funding Need USD mln 0.12, Secured Partial, Source Self-financed, Gender Impact Neutral, Progress Ongoing, COVID delay
- Measure 3: Reduction in Transmission & Distribution losses
  - Start 2013, End 2020, Share of 2030 8.9 (in percent), Funding Need USD mln 64.7, Secured Partial, Source Various, Gender Impact Neutral, Progress Ongoing, COVID delay
- Measure 4: Installation of LED Street Lighting
  - Start 2017, End 2021, Share of 2030 1 (in percent), Funding Need USD mln 15, Secured Funded, Source Various, Gender Impact Positive, Progress Ongoing, COVID delay
- Measure 5: Switch to fluorescent lights in schools & hospitals
  - Start 2020, End 2030, Share of 2030 0.1 (in percent), Funding Need USD mln 0.1, Secured Unclear, Source Domestic, Gender Impact Positive, Progress Unclear, COVID delay
- Measure 6: Deploy low-carbon busses
  - Start 2020, End 2025, Share of 2030 0.2 (in percent), Funding Need USD mln 30.05, Secured Unclear, Source Various, Gender Impact Positive, Progress Ongoing
- Measure 7: Biodiesel blending (B5)
  - Start 2020, End TBD, Share of 2030 1.4 (in percent), Funding Need USD mln 148.4 annually, Secured Unclear, Source Domestic, Gender Impact Neutral, Progress Yet to start, COVID delay
- Measure 8: Improved use of heat & power in alumina refining
  - Start 2020, End 2030, Share of 2030 30 (in percent), Funding Need USD mln 1.96, Secured Partial, Source Domestic, Gender Impact Neutral, Progress Ongoing
- Measure 9: Use LNG @ Alpart refinery
  - Start 2019, End TBD, Share of 2030 13 (in percent), Funding Need USD mln TBD, Secured Unclear, Source Domestic, Gender Impact Neutral, Progress Yet to start, COVID delay
- Measure 10: Tree Planting 3 million
  - Start 2020, End 2022, Share of 2030 2.2 (in percent), Funding Need USD mln 2.16, Secured Funded, Source Various, Gender Impact Positive, Progress Ongoing
- Measure 11: No net loss of forest cover
  - Start 2013, End 2030, Share of 2030 13.2 (in percent), Funding Need USD mln TBD, Secured Unclear, Source Domestic, Gender Impact Neutral, Progress Ongoing
- Measure 12: Reduce non-revenue water losses in Kingston
  - Start 2015, End 2021, Share of 2030 0.6 (in percent), Funding Need USD mln 45, Secured Partial, Source Various, Gender Impact Neutral, Progress Ongoing
- Measure 13: Energy Efficiency & Conservation
  - Start 2012, End 2018, Share of 2030 0.2 (in percent), Funding Need USD mln 20, Secured Funded, Source Various, Gender Impact Neutral, Progress Concluded
- Measure 14: Energy Efficiency in Public Buildings
  - Start 2017, End 2023, Share of 2030 0.4 (in percent), Funding Need USD mln 22.8, Secured Partial, Source Various, Gender Impact Neutral, Progress Ongoing
- Measure 15: Energy Efficiency Urban Traffic System
  - Start 2017, End 2023, Share of 2030 6.4 (in percent), Funding Need USD mln 3.43, Secured Partial, Source Various, Gender Impact Neutral, Progress Ongoing
- Measure 16: Reduce electricity consumption in water sector
  - Start 2020, End 2030, Share of 2030 1 (in percent), Funding Need USD mln 34.97, Secured Partial, Source Various, Gender Impact Neutral, Progress Ongoing
- Source for Table 1: World Bank, Jamaica’s NDC Implementation Plan, Washington DC, August 2021.

### Selected non-NDC climate-related projects and costs (excerpt from Table 2)
- River Training — Total Cost (US$ Million) 8.5
- Retaining Walls — Total Cost (US$ Million) 19.0
- Gully Works — Total Cost (US$ Million) 9.0
- Support to the Formulation of Project Proposal ADAPT-JAMAICA for the Green Climate Fund (GCF) — Total Cost (US$ Million) 20.0
  - Objective: support ministry to develop climate-smart practices in agriculture and fisheries with focus on water management, agricultural disaster risk management and ecological approaches; community-based; incorporate small farmers, fishers, women and youth.
- Building Community Resilience among Persons with Disabilities through Sustainable Land Management and Climate Smart Agricultural Practices — Total Cost (US$ Million) 0.1
- Building Climate Resilience of Urban Systems Through Ecosystem-based Adaptation (EbA) in Kingston, Jamaica — Total Cost (US$ Million) 6.0
  - Objective: Increase capacity of government and local communities in three medium-sized LAC cities to adapt through integration of EbA into urban planning; demonstration EbA interventions in Kingston.
- Centre for Disaster Risk Management Regional — Total Cost (US$ Million) 0.6
  - UK contribution via Centre for Global Disaster Protection; GoJ requested support for DRF policy, strategy and implementation, including risk transfer instruments for public assets, technical assistance, access to finance, private sector coverage of critical assets, CAT bond feasibility assessment, and optimisation of over $80m a year the Jamaican Gov’t and SoE’s spend on insurance for critical public assets.
- PPCR-Improving Climate Data and Information Management Project — Total Cost (US$ Million) 6.8
  - Components: updating Hydromet data collection/processing/forecasting; developing climate change scenarios and vulnerability assessments and strengthening web portal; climate change education, awareness and behaviour change.
- Resilience Strengthening to Climate Change Impacts through Youth Education in Primary Schools — Total Cost (US$ Million) 0.2
- Project for the Improvement of Emergency Communication System — objective includes development of national Disaster Emergency Communication system, Early Warning System and equipment procurement; components include construction of repeater station huts and racks and procurement and installation of equipment.

*International Monetary Fund, Jamaica: 13. Priorities Going Forward.*

### 3. Consulting services

### 3. Consulting services

### Climate Change Adaptation / Resilience / Disaster Management
- Aquaponics: Increasing Access to Climate-Smart Agriculture in Jamaica.
  - Objective: To create a commercially viable market for aquaponics technology in the production of fish and horticulture for local high value markets.
  - Components:
    - Component I: Enhancing technical and business capacity for aquaponics production.
    - Component II: Building stronger linkages for aquaponics production.
    - Component III: Structuring customized financial product in partnership with local financial institutions.
  - Total Cost: 12.7

- Building Resilience through Climate Adaptation Technologies.
  - Objective: To use technology to improve climate, weather data and other hazard-related information and to share it effectively, resulting in the prevention of a loss of life, damage to property and revenue losses as a result of severe weather and climate events.
  - Total Cost: 1.9

- PROADAPT2 - Financing Water Adaption in Jamaica's New Housing Sector.
  - Objectives:
    - (i) to facilitate the uptake of water adaptation measures in the housing sector across Jamaica, including the use of rain water harvesting systems, water efficient taps and showers, low-flush toilets, efficient irrigation systems, greywater recycling facilities, among other appropriate efficiency measures;
    - (ii) to increase climate resilient housing in Jamaica, through greater awareness of the business and financial cases for developing and building homes with water efficient measures;
    - (iii) to increase the efficiency in the use of water by Jamaican homes, improve the reliability of water supply and thereby enhance Jamaica’s water security and climate resilience.
  - Components:
    - Component I: Stakeholder Consultation, Project Launch and Preparation of the Business Case for Water Efficiency (MIF: US$50,500; Counterpart: US$38,000; NDF Cofinancing: US$40,000).
    - Component 2: On-Lending for the Integration of Water Adaptation Measures.
  - Total Cost: 0.6

- Essex Valley Agricultural Development Project (UK-CIF).
  - Objective: To enhance production and productivity of farmers in Essex Valley in a socially inclusive gender equitable and climate sensitive manner.
  - Components:
    - Component 1: Improved Irrigation Systems.
    - Component 2: Enhanced Agricultural Production, Marketing Facilities and Systems.
    - Component 3: Energy Efficiency/Renewable Energy.
    - Component 4: Technical Assistance.
    - Component 5: Land.
    - Component 6: Project Management, Financial Audits and Baseline Survey.
  - Total Cost: 42.0

- Southern Plains Agricultural Development Project.
  - Scope: Support expansion and improvement of irrigation and farm access road network, strengthening commercial market linkages for small scale farmers, installation of flood control systems; construction of packing houses and Global G.A.P structures in Parnassus (Clarendon) and Amity Hall (St. Catherine).
  - Total Cost: 22.2

- Strengthening Health Facilities in the Caribbean (Regional) £43.8m.
  - Objective: To provide safer, greener health facilities in the region, enable delivery of care in disaster, generate operational savings and reduce disaster losses.
  - Jamaica-specific: Complete 150 health facility assessments (HIS & greening audits) and upgrade up to 11 facilities; smart audit of all district clinic or polyclinic facilities; at least 6-8 facilities rehabilitated and/or retrofitted. Proposed facilities listed.
  - Total Cost (Jamaica allocation shown): 5.0

- Strengthening Disaster Recovery and Resilience in the Caribbean (Regional) £5m.
  - Objective: Protect poor and vulnerable people in ODA-eligible Caribbean states, ensuring gender responsive and inclusive action, save lives and assist countries to recover more quickly after a disaster; strengthen preparedness and macro public financial investment, speed up recovery and reconstruction, and deliver more cost-effective, rapid and reliable response to emergencies (e.g., shock responsive social protection).
  - Total Cost: 0.9

- Caribbean Disaster Risk Management Fund (Regional).
  - Objective: Support community-driven projects seeking resilience to natural hazards and climate change.
  - Jamaica-supported entities (examples and dates as provided): Jamaica Amateur Radio Association (2011-2014); Panos Caribbean (2012-2015); Jeffrey Town Farmers Association Ltd. (2013-2014); Abacus for Communities (2015-2016); Caribbean Coastal Area Management Foundation (2014-2016); Dolphin Head Local Forest Management Committee (2017-2019, ongoing).
  - Total Cost: 0.4

- Impact Assessment of Climate Change on the Sandy Shorelines of the Caribbean Project – Pilot Project.
  - Objective: Improve resilience of coastal communities to climate change and sea-level rise through regional erosion-monitoring networks and sharing of beach rehabilitation, observation and preservation best practices. Jamaica selected as the pilot country/launch pad.
  - Total Cost: 1.0

- Enhancing the Resilience of the Agriculture Sector and Coastal Areas to Protect Livelihoods and Improve Food Security.
  - Objectives:
    - (i) strengthens coastal resilience;
    - (ii) improves land and water management for the agricultural sector;
    - (iii) builds institutional and local capacity for climate change adaptation and disaster risk reduction.
  - Total Cost: 10.0

- PPCR - Promoting Community-based Climate Resilience in the Fisheries Sector.
  - Objective: Increase adoption of climate resilient practices among targeted fishing and fish farming communities.
  - Components:
    - Component 1: Strengthening the Fisheries Policy and Regulatory Framework.
    - Component 2: Diversification and Fisheries Based Alternative Livelihoods.
    - Component 3: Capacity Building and Awareness-Raising.
  - Total Cost: 4.9

- Disaster Vulnerability Reduction Project.
  - Objective: Enhance Jamaica’s resilience to disaster and climate risk through improved collection and generation of risk information, analysis and use in monitoring systems and decision-making, retrofitting and/or construction of key infrastructure assets, and strengthening institutional capacities for climate and disaster risk management.
  - Components and allocations:
    - Component 1: Technical Assistance for Improved Disaster and Climate Resilience (US$3.815M).
    - Component 2: Risk Reduction (US$23.61M).
    - Component 3: Contingent Emergency Response.
    - Component 4: Project Administration (US$2.5M).
  - Total Cost: 30.0

- Sub-Total Climate Change and Adaption/Resilience Disaster Management:
  - Total: 202.8

### Climate Change Mitigation / Energy
- Negril Water Supply Improvement Project & Transmission Main Installation.
  - Components:
    - A. Water Treatment Plant Construction (details: Raw Water intake, Splitter Box, Clarifiers with sludge draw off system, Sand filters with sand Wash machine, Clear Well with Booster Pumps, Chemical Mixing and Dosing Building, Control Room with Laboratory, Office and Operators facilities).
    - B. Transmission Main Installation - Supply and Installation of 32km of 800mm diameter pipeline between the Roaring River Water Treatment Plant and Sheffield/Negril, Westmoreland.
    - C. Renewable Energy Solutions - Supply and installation of Solar Farm to improve the capacity and ability of the water treatment Plant to adapt and be resilient to climate change.
  - Total Cost: 101.0

- Island-wide Non-Revenue Water (NRW) Reduction Programme.
  - Objective: Reduce NRW levels from estimated current level of a 75% of water production to 30% to improve adaptability and resilience to climate change, inclusive of reduction of GHG emissions and carbon ‘foot-print’.
  - Total Cost: 303.0

- Soapberry Wastewater Treatment Plant Privatization and Expansion.
  - Current capacity: 75,000 m3/day; capable of serving about 256,000 persons.
  - Project aims:
    - Expand capacity to 150,000 m3/day to meet medium-term wastewater treatment requirements in the Kingston Metropolitan Area (KMA).
    - Facilitate expansion of KSA sewer network and opportunity for more residential and commercial infrastructure development.
    - Ensure output meets or exceeds National Environment and Planning Agency’s (NEPA’s) guidelines for effluent quality.
    - Reuse output for agricultural purposes to offset potable water use from Rio Cobre River.
    - Ensure plant can adapt and be resilient to climate change, including mitigation via new technologies and renewable energy solutions.
  - Total Cost: 85.0

- Greater Spanish Town Centralized Sewerage & Wastewater Treatment Plant - St. Catherine.
  - Components:
    - A. Rehabilitation of Package Plants to improve performance and regulatory compliance (NEPA) in short to medium term.
    - B. Construction of WWTP & Installation of Sewer Network - phased construction, decommission/convert packaged WWTPs into pumping stations, implement sewerage network and modular expansion of centralized WWTP with an actual WWTP Design Flow of 83,000 m3/d; requires environmental impact assessment, topographical survey and geotechnical assessment, hydraulic modeling and analysis of sewer network.
    - C. Climate Change /Renewable Energy Solution: ability to adapt and be resilient to climate change, inclusive of mitigation via introduction of new technologies and renewable energy solutions; use of energy and resource conservation technology to maximize practical and economic feasibility.
  - Project aims: facilitate expansion of network and enable more residential and commercial development; ensure output meets or exceeds NEPA effluent guidelines.
  - Total Cost: 526.0

- Greater Portmore Ponds Wastewater Treatment Plant Rehabilitation & Upgrading Works Phase 2.
  - Objectives:
    - Improve treatment process and compliance with environmental and effluent standards (NEPA, MoH, etc).
    - Reduce environmental hazard and risk to surrounding community.
    - Increase customer base and service/coverage area.
    - Facilitate land development.
    - Increase treatment capacity of the western section of the facility.
  - Total Cost: 0.6

- Ferry Springs Water Supply System Improvement Project.
  - Total Cost: 30.0

- Rehabilitation & Upgrading of 8 (K-Factor) NWC WWTPs (K8).
  - Total Cost: 18.0

- Design and Build of 5 NWC Wastewater Treatment Plants, M5 (Mechanical Systems: Ensom City, Longsville Park, Paisley Pen, Redhills Pen and Shrewsbury WWTPs).
  - Total Cost: 16.0

- Renewable Energy (GPP WWTPP2).
  - Objective: Human and institutional capacities are enhanced with the introduction of RE and promotion of EE.
  - Components:
    - Component 1: Confirm basic information for capacity building for RE introduction.
    - Component 2: Confirm basic information for capacity building for EE introduction.
    - Component 3: Human/Institution Capacity Enhancement for RE and EE.
  - Total Cost: 9.6

- Supporting Sustainable Transportation through the Shift to Electric Mobility In Jamaica.
  - Objective: Address prioritised challenges and demonstrate EV technology in Jamaica to determine conditions for social, technical, economic and environmental sustainability. Short-term priorities: (a) policy design and regulation including technical standards and waste management; (b) strengthening the “EV ecosystem” by building skills and competences and supporting “smart” business development; (c) increase market confidence and reduce perceived risks.
  - Components:
    - Component 1: Institutionalisation of low-carbon electric mobility. (Outcome 1.1 The policy and institutional framework for eMobility in Jamaica has been strengthened).
    - Component 2: Short term barrier removal through low-carbon e-mobility demonstrations. (Outcome 2.1 eMobility demonstration pilot prepared, implemented and monitored).
    - Component 3: Preparing for scale-up and replication of low-carbon electric mobility. (Outcome 3.1 Jamaica’s knowledge base, technical skills, and investors' awareness enhanced).
  - Total Cost: 13.2

- Strengthening Energy Sector Resilience in Jamaica.
  - Objective: Increase resilience of Jamaica's energy sector to natural disasters by promoting energy resilience and diversification of the energy market.
  - Mechanism: Global Development Alliance (GDA) with U.S. and Jamaican firms to open legal and regulatory framework for increased diversification to renewable energy; increase public sector EE and distributed generation; raise consumer awareness and financing access for modern energy technologies; support a Public Private Alliance for Energy and Disaster Resilience.
  - Potential leverage: GDA has the potential to leverage upward of $50m in private sector investments.
  - Total Cost: 4.0

- USAID-NREL Partnership for Jamaica.
  - Objective: Increase energy resilience of Jamaica’s critical infrastructure essential to relief and recovery operations.
  - Activities: NREL will assess three critical facilities and develop suggested interventions (including procurements) to address vulnerabilities and support design and implementation of a distributed network of energy-resilient facilities for continuity of critical community services.
  - Total Cost: 0.2

- Jamaica Non-Technical Loss Working Group Priorities Execution.
  - Objective: Support implementation of electricity non-technical loss (NTL) activities identified by the USAID funded Jamaica Non-Technical Loss Working Group; support implementation of electricity loss reduction tasks prioritized by JPS and the NTL Working Group.
  - Total Cost: 0.3

- Improved Forest Management for Jamaica (€16.55 million).
  - Specific objectives:
    1. Reverse forest degradation, deforestation and the loss of forest biodiversity, through conservation and sustainable forest management, as well as strengthening the legislative, policy and institutional framework of the sector.
    2. Enhance economic, social and environmental benefits of forests through the sustainable utilization of forest resources.
  - Expected results and sub-components:
    - 1.1 Strengthened governance, policy and legislative framework to ensure sustainable development of the forest sector.
    - 1.2 Improved participatory planning to protect, conserve and manage Jamaica’s forests.
    - 2.1 Strengthened institutional capacity for improved availability of data and capacity for monitoring and knowledge management.
    - 2.2 Improved availability of spatial data for sustainable forest management practices, promoting investments, and assessing vulnerabilities and risks in the forest sector.

*Source: 1jamea2023002 - 3. Consulting services*

### 2.3 Forest communities, the general public as well

### 2.3 Forest communities, the general public as well

### Climate-related projects (selected entries and costs)
- A Jamaican Path from Hills to Ocean (H20) project.
  - Objective: To increase resilience to climate change and reduce poverty by protecting livelihoods through the implementation of an integrated landscape management methodology.
  - Targeted WMUs: Wagwater including Castleton Gardens (St. Mary), the Rio Nuevo (St. Mary) and the Rio Bueno and White River (St. Ann and Trelawny); also wetlands in Falmouth (Trelawny) and the Mason River Protected Area (Clarendon and St. Ann); sea grass beds in Ocho Rios (St. Ann) and the Hellshire Bay and Half Moon Bay – Portland Bight Protected Area (St. Catherine and Clarendon).
  - Total Cost (US$ Million): 7.0

- Blue carbon restoration in southern Clarendon.
  - Objective: To restore mangrove ecosystems in southern Clarendon along the south coast of Jamaica, to conditions of viable/healthy and optimally functioning coastal forested ecosystems. The interventions are expected to improve the sequestration capacity of these restored areas to store blue carbon (carbon that is stored in coastal and marine ecosystems), in addition to improving climate change resilience.
  - Total Cost (US$ Million): 3.4

- Mitigating Deforestation and Enhancing Livelihoods through Climate Smart Agriculture Technology and Knowledge Platform in the Springvale Community.
  - Objective: To equip farmers in two communities with the knowledge to increase their productivity and build resilience while reducing their vulnerability to climate change.
  - Total Cost (US$ Million): 0.1

- Conserving the Natural Resources through Innovative Agricultural Techniques in the Negril Environmental Protection Area.
  - Objective: To conserve the natural resources in the Negril Environmental Protection Area, through innovative agricultural techniques.
  - Total Cost (US$ Million): 0.1

- Conserving Biodiversity and reducing land degradation using an integrated landscape approach.
  - Objective: To enhance conservation of biodiversity and ecosystem services through the mainstreaming of biodiversity into planning policies and practices into Jamaica’s productive sectors.
  - Components:
    - Component 1: Systemic and institutional capacity for integrated landscape management at national level;
    - Component 2: Application of Integrated landscape planning and management in key biodiversity areas; and
    - Component 3: Knowledge management, gender mainstreaming and monitoring and evaluation.
  - Total Cost (US$ Million): 6.3

- CReW+: An integrated approach to water and waste water management using innovative solutions and promoting financing mechanisms in the Wider Caribbean Region REGIONAL (US$15.2 million).
  - Objective: To implement innovative technical small-scale solutions in the Wider Caribbean Region using an integrated water and wastewater management approach building on sustainable financing mechanisms piloted through the Caribbean Regional Fund for Wastewater Management.
  - Total Cost (US$ Million): (regional component noted as US$15.2 million)

- Expansion of the Rescue Centre to Support In-situ Conservation of Jamaican Protected and Endangered Fauna and Flora through Capacity Building and Community Education.
  - Objective: The project seeks to conserve a viable population of the Jamaican Iguana and its natural habitat in perpetuity through Public awareness activities while generating alternative livelihoods for Community Members.
  - Total Cost (US$ Million): 0.3

- Strengthening Community Resilience to Ensure Sustainable Management of Our Natural Resources Through Social Inclusion.
  - Objective: The project will address issues related to climate change, improper land use such as poor farming practices, cutting of trees in the forest, which lead to land degradation and flooding thus severely impacting the watersheds. Also, issues of social inclusion, ‘youth-at-risk’ and the elderly.
  - Total Cost (US$ Million): 0.4

- Strengthening Community Resilience while Ensuring Food Security through Efficient Management of Natural Resources with the Use of Energy Efficient Technology.
  - Objective: The project seeks to promote sustainable strategies aimed at mitigating climate change risks in the communities of Northern Clarendon (targeting Mount Airey, Richmond Park and Crooked River). The project is in alignment with the UN/GOJ UN Trust Fund on Human Security joint project.
  - Total Cost (US$ Million): 0.4

- Sustainable Ecosystem Management to support Agroforestry, Agro-tourism and Community Development in vulnerable communities in Portland and St. Thomas.
  - Objective: To improve sustainable management of resources to support the contribution of agro-forestry and agro-tourism to income generation and community development in four buffer communities of the Blue and John Crow Mountains National Parks.
  - Total Cost (US$ Million): 0.2

- Enhancing the Legislative Framework in Jamaica while fostering community and private sectors' engagement to reduce plastic marine litter from land activities.
  - Objective: To enhance the capacity and legislative framework of Jamaica to reduce and management plastic marine litter from land-based activities in an integrated and environmentally sound manner and demonstrate the potentials of plastic waste prevention and sound management while catalyzing action for the reduction of plastic marine litter generated by land-based activities.
  - Total Cost (US$ Million): 0.7

- Integrating Water, Land and Ecosystems Management in Caribbean Small Island Developing States (IWEco).
  - Objective: To contribute to the preservation of Caribbean ecosystems that are of global significance and the sustainability of livelihoods through the application of existing proven technologies and approaches that are appropriate for small island developing states through improved fresh and coastal water resources management, sustainable land management and sustainable forest management that also seek to enhance resilience of socio-ecological systems to impacts of climate change.
  - Total Cost (US$ Million): 3.1

- Strengthening Human Resilience in Northern Clarendon and West Kingston.
  - Objective: To contribute to enhanced resilience and human security of communities in Northern Clarendon and West Kingston. The project centers on poverty reduction and climate change adaptation and will seek to bolster economic development through enhanced climate resilience, sustainable agriculture, social cohesion and sustainable livelihood.
  - Total Cost (US$ Million): 1.0

- Sub-Total Climate Change Mitigation/Energy: 1,149.6
- Grand Total (all projects in table): 1,352.3

(Note: activities are still being implemented and funds being disbursed under projects in the matrix that have an end date of 2021.)

### Reform Measures under the RSF (Table 3 highlights)
- Pillar 1: Building Fiscal and Physical Resilience to Natural Disasters and Climate Change
  - RM1: The Ministry of Finance and Public Service (MOFPS) to adopt a National Natural Disaster Risk Financing (DRF) policy.
    - Target Date: 1st PLL Review (end-June 2023)
    - Analytical Underpinning: RM1 is informed by the WB’s 2018 report “Advancing Disaster Risk Finance in Jamaica’’. Draft C-PIMA near completion.
  - RM2: The Development Bank of Jamaica in consultation with the MOFPS to modify the Policy and Institutional Framework for the Public-Private Partnership (PPP) policy Program of the Government of Jamaica to include climate requirements in PPP project agreements from project identification to contract management and revise the PPP Standard Operating Procedure Manual to reflect these requirements.
    - Target Date: 1st PLL Review (end-March 2023)
    - Analytical Underpinning: RM2 is informed by the IDB’s June 2020 report “Improving Climate Resilience in PPPs in Jamaica”. Draft C-PIMA near completion.
  - RM3: The Public Investment Appraisal Branch (PIAB) to define a methodology to conduct climate impact assessments at project appraisal stage (project proposal stage) and incorporate the methodology in the Public Investment Management System (PIMS) handbook.
    - Target Date: 2nd PLL Review (end-Dec. 2023)
    - Analytical Underpinning: RM3 and RM4 are high urgency measures informed by the IDB’s 2020 report “Improving Climate Resilience in PPPs in Jamaica”, the WB’s 2019 report “How Disaster Resilient is Jamaica’s Public Financial Management?”, and IAD’s 2016 report. Draft C-PIMA near completion.
  - RM4: The Planning Institute of Jamaica (PIOJ) to define and publish project selection criteria including climate change criteria.
    - Target Date: 2nd PLL Review (end-Dec. 2023)
  - RM5: The MOFPS to conduct and publish in the Fiscal Risk Statement quantitative analysis of the fiscal risks generated by climate change.
    - Target Date: 3rd PLL Review (end-March 2024)
    - Analytical Underpinning: RM5 is informed by the World Bank’s (WB) 2018 report “Advancing Disaster Risk Finance in Jamaica’’. Draft C-PIMA near completion.
  - RM6: The MOFPS to submit to parliament an amendment to the Financial Administration and Audit Act to establish a National Natural Disaster Reserve Fund (NDRF) subaccount under the consolidated fund account. In parallel, the MOFPS to approve financial regulations for a transparent administration and reporting of the NDRF.
    - Target Date: 2nd PLL Review (end-December 2023)
    - Analytical Underpinning: RM6 is a high urgency measure informed by the WB’s 2018 report “Advancing Disaster Risk Finance in Jamaica’’. Draft C-PIMA near completion.

- Pillar 2: Strengthening Mitigation/Promoting Renewables
  - RM7: The MOFPS to submit to parliament a bill to incentivize investment in renewables through fiscal measures.
    - Target Date: 3rd PLL Review (end-June 2024)
    - Analytical Underpinning: RM7 is high feasibility measure. Supported by WB’s 2021 report “Jamaica’s Long-Term Climate Change Strategy Recommendations” and relevant literature on incentives and feebates.
  - RM8: The Ministry of Science, Energy and Technology (MSET) to submit to parliament the electric vehicles policy, in line with the objectives in paragraph 23 of the Written Statement.
    - Target Date: 1st PLL Review (end-June 2023)
    - Analytical Underpinning: RM8 is a high urgency and feasibility measure. Cited: WB August 2021 report “Jamaica’s Long-Term Climate Change Strategy Recommendations”, USAID 2018 report “Caribbean Clean Energy Program”, Deloitte Advisory 2020 “Strategic Framework for Electric Mobility in Jamaica”, and IDB partnership with the Green Climate Fund (July 2022).
  - RM9: The MSET to approve guidelines adapted to the type and purpose of the structures, to reduce energy use in schools, hospitals, and public buildings for the existing and new structures.
    - Target Date: 1st PLL Review (end-June 2023)
    - Analytical Underpinning: RM9 is high feasibility, high urgency and will deepen synergies with the energy management and efficiency program (2017-21) funded by the IDB, CIF and JICA.

- Pillar 3: Greening the Financial Sector
  - RM10: BOJ to publish a climate risks assessment (including a diagnostic of related climate and environmental risks detailing the current governance and regulatory regime) and define a timeline to embed these risks in supervisory activities and related databases for the development of climate risks assessments.
    - Target Date: 2nd PLL Review (end-Dec. 2023)
    - Analytical Underpinning: RM10 and RM11 are high feasibility, high urgency measures informed by the BOJ’s and the French Development Agency (FDA) assessment. This assessment spurred a 2022 project “Assessing Climate Related Risks in the Jamaican Financial System” launched with assistance from the FDA.
  - RM11: Adopt a monitoring framework that improves data collection and establishes the reporting requirements for financial institutions to implement Climate Related Financial Risks stress testing and for the BOJ to gradually integrate climate risks in supervision and macroprudential policy formulation.
    - Target Date: 3rd PLL Review (end-June 2024)
  - RM12: Establish an institutional framework for green-bond issuance and trading.
    - Target Date: 3rd PLL Review (end-June 2024)
    - Analytical Underpinning: RM12 is a high feasibility measure building upon outcomes of a project supported with the 2019 Green Climate Fund Readiness Grant (US$0.6 million). RM12 deepens synergy with this project.

### Key Debt Sustainability Analysis points (Annex IV)
- Overall assessment: Jamaica’s public debt is sustainable.
- Recent debt trajectory:
  - Public debt declined to 94 percent of GDP in FY2021/22 (from 110 percent of GDP in FY 2020/21).
  - Authorities’ target: Fiscal Responsibility Law debt target of 60 percent of GDP by FY2027/28 (with a modest two-year delay from the original FY2025/26 target date under the Fiscal Responsibility Law).
- Drivers and assumptions in the baseline DSA:
  - Growth is expected to converge to its potential over the medium-term.
  - Inflation is expected to recede to 5 percent over the medium-term.
  - Fiscal balance is expected to be around 0.5 percent of GDP in the near term, in line with the MTFF and FRL targets.
  - Over the medium-term fiscal balances are projected to rise to 1.5-2 percent of GDP to bring debt down to the FRL target of 60 percent of GDP by FY 2027/28.
  - Interest rates are assumed to increase by 100 basis points in FY 2022/23.
  - External debt projections are based on a projected increase in the current account deficit of around 2 percent of GDP over the medium term and planned disbursements of project loans by multilateral and bilateral creditors.
- Role of RSF funds:
  - Use of RSF funds would create fiscal space by lowering the gross financing needs.
  - Without the RSF, a larger share of GFN would be financed by government borrowing from the market, on less concessional terms.
  - RSF funds would boost investment and growth which would lower the long-term debt ratios over time.
- Vulnerabilities: Debt dynamics remain vulnerable to the uncertainties surrounding the global commodity shocks, natural disasters, and the realization of contingent liabilities from public bodies.

*Source: Excerpt from “1jamea2023002 - 2.3 Forest communities, the general public as well” (IMF PDF chapter/section).*

### 3.      Jamaica faces modest near-term gross financing needs. External debt stood at 61

### 3.      Jamaica faces modest near-term gross financing needs. External debt stood at 61 percent of GDP at end of FY2021/22

### Debt profile and key statistics
- External debt: 61 percent of GDP at end of FY2021/22.
- Share owed to private creditors: 58 percent.
- Currency composition of external debt: 98 percent denominated in US dollars.
- Maturity profile of external debt: 35 percent medium term (1-5 years) and 55 percent long-term (over 5 years).
- Domestic debt (central government): about 35 percent of central government debt.
- External debt composition (central government basis): multilateral loans 22 percent, bilateral loans 5 percent, international sovereign bonds 38 percent, and nonresidents’ holdings of treasury bills and bonds 3 percent.
- Nominal GDP (memo in table): 15178, 15178, 16026, 16367 (values as presented in the source table).
- Debt buybacks in 2019: around US$1 billion.
- Principal payments associated with buybacks of external debt will resume only from 2025 onwards.

### Debt management actions and implications
- 2019 liability management operations: buybacks of outstanding global bonds due in 2022, 2025, and 2028 totaling around US$1 billion, plus reopening/issuance of the global bond due 2045, resulted in substantial maturity extension.
- Authorities plan to continue opportunistic liability management operations (LMOs) as part of medium-term strategy to mitigate costs and risks.
- Plans to reduce reliance on FX-denominated borrowing and further develop the local currency bond market over the medium term are expected to benefit the public debt risk profile.
- Evolution of public debt holders has shifted toward a more evenly distributed creditor base; sovereign–financial sector interconnectedness has been reduced.
- The 2010 and 2013 debt restructurings resulted in large reductions in debt service through swapping short-term debt with long-term debt or discounts; restructured securities have longer grace periods and maturities with low interest rates.

### Medium-term risk analysis (mechanical signals and staff assessment)
- Overall medium-term risk: Low (consistent with mechanical signals).
- Fan chart index (measuring medium-term solvency risks): score at 1.5, described as moderate; baseline debt trajectory and fan are on a downward trend; probability of debt not stabilizing is assessed to be limited.
- Gross Financing Needs (GFN) finance ability index (measuring medium-term liquidity risks): score of 6.5, described as low risk (below the low-risk threshold of 7.6).
- Medium-term GFN expected to gradually come down as fiscal consolidation progresses.
- Limited roll-over risks in the medium-term due to maturity extension (including issuance of 2045 bonds).
- Main vulnerabilities: re-emergence of COVID-19, natural disasters, global economic downturn could affect the above assessments.

### Long-term risk analysis and scenarios
- Long-term risk: assessed as moderate.
- Large amortization module results: gradual declines in GFN and debt relative to GDP both under the baseline and customized scenarios.
- Climate-related spending in customized scenario: assumes an increase of 0.5 percent of GDP per year for adaptation and mitigation investment needs; in this scenario public debt and GFN increase relative to the baseline but remain on a downward trajectory over a 20-year horizon.
- Healthcare expenditure: current policies would not pose significant sustainability concerns.
- Pension expenditures: under the current pension system would lead to larger GFNs and an upwards debt trajectory in the long run, indicating the need for parametric reforms of the public pension system.
- Adverse scenario: public debt will be higher than baseline because of lower growth, higher fiscal deficits, and higher borrowing costs; nevertheless, public debt would be on a downward trajectory and sustainable with a high probability.

### Sustainability assessment and policy implications
- Final assessment: Public debt is assessed to be sustainable with a high probability.
- Projected trajectory: public debt is on a declining path and is expected to decline to 60 percent of GDP by FY2027/28 as stipulated under the Fiscal Responsibility Law (FRL).
- Drivers of sustainability: strong policy track record, authorities’ commitment to meet the medium-term debt target sooner should growth overperform, and prudent debt management.
- Policy recommendations implied by the analysis:
  - Continue fiscal consolidation to reinforce the declining debt trajectory.
  - Pursue opportunistic LMOs to manage costs and rollover risks.
  - Reduce reliance on FX-denominated borrowing and develop the local currency bond market.
  - Undertake parametric reforms of the public pension system to avoid long-run upward pressure on GFNs and debt.
  - Maintain readiness to manage shocks (e.g., COVID-19 resurgence, natural disasters, global downturn) that could alter the baseline trajectory.

*Source: Fund staff (as presented in the provided content).*

### 5. Debt consolidation across sectors:

### 5. Debt consolidation across sectors:

### Coverage and data quality
- The DSA covers debt issued by central government, public bodies and debt guaranteed by central government.
- The authorities are improving coverage and quality of public debt data, including expanding the coverage to general government.
- Perimeter shown in figures is central government.

### Public debt structure and projections (figures & commentary)
- Commentary: The share of external debt is expected to decline over the medium-term as the authorities implement strategies and policies in support of continued development of the domestic debt market.
- Local currency debt is projected to decline with projected fiscal surpluses over medium-term and use of government deposits to pay down domestic debt.
- Strong declining share of “domestic other creditors” in total public debt noted; liability management operations and buybacks of global bonds have reduced the stock of foreign currency debt.
- Planned issuances are mainly for medium to long-term maturity.
- Residual maturity: 6. years
- Projection components shown for marketable vs non-marketable debt and foreign currency vs local currency across 2012–2032.

### Baseline scenario (Table 3 — percent of GDP, unless indicated otherwise)
- Public debt: 2021: 94.28; 2022: 84.17; 2023: 77.97; 2024: 74.06; 2025: 69.86; 2026: 64.05; 2027: 59.55; 2028: 56.15; 2029: 53.34; 2030: 49.54; 2031: 47.44; 2032: 45.8
- Change in public debt: 2021: -15.5; 2022: -10.1; 2023: -6.2; 2024: -3.9; 2025: -4.2; 2026: -5.8; 2027: -4.6; 2028: -3.4; 2029: -2.8; 2030: -3.7; 2031: -2.1; 2032: -1.6
- Contribution of identified flows: 2021: -15.9; 2022: -8.0; 2023: -5.6; 2024: -3.9; 2025: -4.8; 2026: -4.9; 2027: -4.7; 2028: -3.8; 2029: -2.8; 2030: -3.2; 2031: -2.3; 2032: -3.0
- Primary deficit: 2021: -6.8; 2022: -5.8; 2023: -5.4; 2024: -5.2; 2025: -5.6; 2026: -5.7; 2027: -5.3; 2028: -3.3; 2029: -3.2; 2030: -3.0; 2031: -3.0; 2032: -2.9
- Noninterest revenues: 2021: 31.0; 2022: 29.4; 2023: 29.4; 2024: 29.4; 2025: 29.4; 2026: 29.5; 2027: 29.7; 2028: 30.0; 2029: 30.0; 2030: 30.1; 2031: 30.3; 2032: 30.4
- Noninterest expenditures: 2021: 24.2; 2022: 23.6; 2023: 24.0; 2024: 24.2; 2025: 23.9; 2026: 23.8; 2027: 24.3; 2028: 26.7; 2029: 26.8; 2030: 27.1; 2031: 27.3; 2032: 27.5
- Automatic debt dynamics: 2021: -9.1; 2022: -2.2; 2023: -0.2; 2024: 1.2; 2025: 0.8; 2026: 0.8; 2027: 0.6; 2028: -0.5; 2029: 0.4; 2030: -0.2; 2031: 0.7; 2032: -0.1
- Contribution: interest-rate-growth differential: 2021: -12.9; 2022: -4.4; 2023: -0.6; 2024: 0.5; 2025: 0.0; 2026: -0.1; 2027: -0.2; 2028: -0.2; 2029: -0.1; 2030: 0.2; 2031: 0.2; 2032: 0.3
- Real interest rate: 2021: -4.6; 2022: -1.2; 2023: 1.0; 2024: 1.8; 2025: 1.2; 2026: 1.0; 2027: 0.8; 2028: 0.7; 2029: 0.8; 2030: 1.0; 2031: 1.0; 2032: 1.0
- Real growth rate: 2021: -8.3; 2022: -3.2; 2023: -1.6; 2024: -1.4; 2025: -1.2; 2026: -1.1; 2027: -1.0; 2028: -0.9; 2029: -0.9; 2030: -0.8; 2031: -0.8; 2032: -0.7
- Contribution of residual: 2021: 0.4; 2022: -2.5; 2023: -1.4; 2024: 0.0; 2025: 0.5; 2026: -0.9; 2027: 0.1; 2028: -0.7; 2029: -0.2; 2030: -1.6; 2031: 0.0; 2032: 0.5
- Gross financing needs: 2021: 4.9; 2022: 5.6; 2023: 6.4; 2024: 9.7; 2025: 3.5; 2026: 3.4; 2027: 3.6; 2028: 10.5; 2029: 8.9; 2030: 5.7; 2031: 2.2; 2032: 3.5
  - of which: debt service: 2021: 11.7; 2022: 11.4; 2023: 11.8; 2024: 14.9; 2025: 9.1; 2026: 9.0; 2027: 8.9; 2028: 13.8; 2029: 12.1; 2030: 8.7; 2031: 5.2; 2032: 6.4
- Local currency financing needs: 2021: 6.9; 2022: 6.5; 2023: 4.9; 2024: 9.1; 2025: 5.3; 2026: 4.1; 2027: 5.5; 2028: 9.8; 2029: 8.9; 2030: 4.5; 2031: 3.0; 2032: 4.3
- Foreign currency financing needs: 2021: 4.8; 2022: 4.8; 2023: 6.9; 2024: 5.8; 2025: 3.8; 2026: 4.9; 2027: 3.5; 2028: 4.0; 2029: 3.1; 2030: 4.2; 2031: 2.3; 2032: 2.1
- Memo: Real GDP growth (percent): 8.2; 3.5; 2.0; 1.8; 1.7; 1.6; 1.6; 1.6; 1.6; 1.6; 1.6; 1.6
- Memo: Inflation (GDP deflator; percent): 10.1; 7.7; 5.2; 4.5; 5.0; 5.0; 5.0; 5.0; 5.0; 5.0; 5.0; 5.0
- Memo: Nominal GDP growth (percent): 19.2; 11.5; 7.3; 6.4; 6.8; 6.7; 6.7; 6.7; 6.7; 6.7; 6.7; 6.7
- Memo: Effective interest rate (percent): 5.1; 6.3; 6.5; 7.0; 6.8; 6.6; 6.3; 6.3; 6.4; 7.1; 7.2; 7.3

Staff commentary on baseline:
- Public debt expected to resume downward path to meet debt target of 60 percent of GDP by FY2027/28, in accordance with the Fiscal Responsibility Law.
- Authorities have reduced near-term financing needs through liability management operations, buybacks and maturity extension (by issuing 2045 bonds).
- Debt dynamics vulnerable to global shocks, natural disasters, and contingent liabilities from public bodies.
- Large GFN needs in FY2024, FY2028 and FY2029 as global bonds mature; issuance of global bonds possible after 2025 when conditions improve.

### Realism of baseline assumptions (Figure 3 — staff commentary)
- Realism analysis does not point to major concerns; past forecast errors do not reveal systematic biases.
- Most debt reduction in next five years expected from improvements in primary balance under the MTFF and FRL.
- Similar or bigger debt reductions and fiscal adjustments were implemented by Jamaica in the past (noted during 2013-19), though these are above the 79th percentile in the distribution shown.
- Improvement in fiscal balance from 2025 will come from lower program spending and decrease in interest payments (lower debt, lower term spreads on external financing).
- r-g differential impacted by high near-term inflation, reflecting low real rates; better debt management expected to reduce real interest rate of public debt.
- Growth projections in line with historical averages.
- Output gap tool indicates existence of negative bias (above 75th percentile) in output gap projections.

### Medium-term risk analysis (Figure 4)
- Debt fanchart and GFN financeability indexes indicate lower level of risk.
- Indicator values (selected):
  - Fanchart width: 53.7 0.8
  - Probability of debt not stabilizing (pct): 2.5 0.0
  - Terminal debt level x institutions index: 31.6 0.7
  - Average GFN in baseline: 5.4 1.8
  - Bank claims on government (pct bank assets): 10.8 3.5
  - Change in claims on govt. in stress (pct bank assets): 3.5 1.2
  - GFN financeability index...6.5
- Prob. of missed crisis, 2022-2027 (if stress not predicted): 9.1 pct.
- Prob. of false alarm, 2022-2027 (if stress predicted): 48.9 pct.
- Staff commentary: In the natural disaster stress scenario, GFN needs will increase by about 1% of GDP relative to baseline.

### Long-term risk analysis (Figure 5 — staff commentary)
- Long-term risk assessed as moderate.
- Large amortization module shows gradual declines in GFN and debt relative to GDP under baseline and customized scenarios.
- Climate-related expenditures manageable and would not significantly impact debt sustainability.
- Current healthcare expenditure policies would not pose significant sustainability concerns.
- Pension expenditures under the current system would lead to larger GFNs and an upwards debt trajectory in the long run.
- Policy implication: Need to undertake parametric reforms of the current public pension system.
- Demographics: Pension financing needs shown for 30 years, 50 years, and until 2100 with GFN-to-GDP ratios 1.05%, 1.79%, 2.66% (labels in figure).

### Adverse scenario (Table 4 — percent of GDP, unless indicated otherwise)
- Public debt under adverse scenario: 2021: 94.28; 2022: 84.18; 2023: 80.87; 2024: 76.77; 2025: 73.06; 2026: 69.76; 2027: 62.25; 2028: 58.15; 2029: 54.25; 2030: 51.85; 2031: 50.85; 2032: 50.5
- Change in public debt (adverse): 2021: -15.5; 2022: -10.1; 2023: -3.4; 2024: -4.0; 2025: -3.7; 2026: -3.3; 2027: -7.4; 2028: -4.1; 2029: -3.9; 2030: -2.4; 2031: -1.0; 2032: -0.4
- Contribution of identified flows (adverse): 2021: -15.9; 2022: -7.5; 2023: -4.1; 2024: -3.1; 2025: -5.2; 2026: -5.3; 2027: -4.7; 2028: -3.9; 2029: -2.9; 2030: -2.4; 2031: -1.4; 2032: -2.2
- Primary deficit (adverse): 2021: -6.8; 2022: -5.3; 2023: -4.9; 2024: -4.8; 2025: -6.1; 2026: -6.4; 2027: -5.1; 2028: -3.3; 2029: -3.2; 2030: -2.3; 2031: -2.2; 2032: -2.1
- Gross financing needs (adverse): 2021: 4.9; 2022: 6.1; 2023: 4.9; 2024: 11.1; 2025: 2.4; 2026: 0.8; 2027: 7.7; 2028: 10.6; 2029: 10.0; 2030: 8.0; 2031: 6.5; 2032: 5.5
- Debt service (adverse): 2021: 11.7; 2022: 11.4; 2023: 11.9; 2024: 15.9; 2025: 8.6; 2026: 7.2; 2027: 12.8; 2028: 13.9; 2029: 13.2; 2030: 10.4; 2031: 8.7; 2032: 7.6
- Memo: Real GDP growth (percent) under adverse: 8.2; 3.5; 1.0; 1.4; 1.7; 1.6; 1.6; 1.6; 1.6; 1.6; 1.6; 1.6
- Memo: Inflation (GDP deflator; percent) under adverse: 10.1; 7.7; 5.2; 4.5; 5.0; 5.0; 5.0; 5.0; 5.0; 5.0; 5.0; 5.0
- Staff commentary mirrors baseline: debt expected to resume downward path to meet 60 percent of GDP by FY2027/28 but remains vulnerable to shocks and contingent liabilities; large GFN needs in FY2024, FY2028 and FY2029.

### External Debt Sustainability Framework and bound tests (Table 5, Figure 6)
- Baseline external debt (selected years, percent of GDP): 2017: 90.4; 2018: 85.7; 2019: 82.6; 2020: 103.9; 2021: 95.4; 2022: 90.3; 2023: 87.1; 2024: 83.0; 2025: 78.4; 2026: 74.4; 2027: 70.8
- Change in external debt (selected years): 2017: -7.2; 2018: -4.7; 2019: -3.1; 2020: 21.3; 2021: -8.5; 2022: -5.1; 2023: -3.3; 2024: -4.1; 2025: -4.6; 2026: -4.0; 2027: -3.6
- Identified external debt-creating flows (4+8+9) series shown (e.g., 2017: -12.2; 2018: -6.3; 2019: -0.2; 2020: 10.7; 2021: -12.4)
- External debt-to-exports ratio (percent): 2017: 268.5; 2018: 225.8; 2019: 223.3; 2020: 517.0; 2021: 296.6; 2022: 235.3; 2023: 216.6; 2024: 203.4; 2025: 193.4; 2026: 184.2; 2027: 176.6
- Gross external financing need (in billions of US dollars; sample entries): 44; 31; 4.9; 14.9; 23; 60.3; 23; 69.6 (table presents multi-year series)
- Key macroeconomic assumptions under baseline: Real GDP growth (percent) series and GDP deflator in US dollars (change in percent) series provided; nominal external interest rate (percent) around 3.0 in several years.
- Figure 6 bound tests: present interest-rate shock, growth shock, current account shock, combined shocks, and real depreciation shock (one-time real depreciation of 30 percent occurs in 2023).
- Figure note: Individual shocks are permanent one-half standard deviation shocks; historical scenarios use ten-year historical averages.

*Source: 1jamea2023002 - 5. Debt consolidation across sectors.*

### Annex V. Inter-Institutional Collaboration for the RSF

### Annex V. Inter-Institutional Collaboration for the RSF

### Overview of collaboration
- The IMF began collaboration with the World Bank (WB) and the Inter-American Development Bank (IDB) in September 2022.
- Collaboration comprised three broadly identified, frequently overlapping stages:
  - (i) information sharing
  - (ii) discussion of potential RSF reform measures
  - (iii) identification of TA areas that can support the RSF goals and Jamaica’s government agenda
- The collaboration continues with the aim of spurring engagement with the government of Jamaica to identify technical assistance (TA) to support implementation of the RSF measures.

### Stage 1 — Information sharing: diagnosis, assessment, and design
- Diagnosis: IMF team identified country climate change issues relevant for Jamaica and engaged with WB and IDB to review existing diagnostic and analytical research, including:
  - (i) climate smart Public Investment Management (PIM)
  - (ii) green Public Financial Management (PFM)
  - (iii) disaster risks management by public institutions
  - (iv) transition to renewables
  - (v) green financing
  - (vi) the use of Public and Private Partnerships (PPP) for climate related investments
- Counterparts shared diagnostic and analytical documents, project documents and evaluations, TA reports, and expert guidance.
- Assessment and Design — examples:
  - National Natural Disaster Risk Financing policy (DRF)
    - The WB noted the DRF is a milestone for disaster and risk management given Jamaica’s high vulnerability to natural hazards.
    - WB shared a policy project report and expert guidance on the importance of a DRF for building climate resilience in Jamaica.
    - Discussions covered enhanced fiscal and financial frameworks, lessons from WB policy projects, and the proper design and placement of the National Natural Disaster Reserve Fund (NDRF) in disaster financing architecture.
    - This collaboration culminated in formulation of Reform Measures 1 and 6 in Annex III Table 3.
  - PPPs Framework and Electric Vehicles Policy
    - IDB shared a report and expert guidance on the importance of PPPs for building climate resilience in Jamaica and the integration of climate change issues into PPP policy and institutional frameworks.
    - Key issue: inclusion of climate risk insurance in PPPs Request for Proposals and contract management to ensure proper allocation of climate risks among PPP partners and protection from potential contingent liabilities.
    - IDB engagement on electric mobility (work initiated in 2020) was highlighted as a basis for an RSF measure on electric vehicles.
    - This collaboration culminated in formulation of Reform Measure 2 (PPPs) and 8 (EV) in Annex III Table 3.

### Stage 2 — Discussion of potential RSF reform measures
- IMF shared draft RSF reform measures with WB and IDB; teams reviewed analytical underpinnings.
- Discussions considered:
  - (i) the importance of the reform measures for Jamaica’s climate agenda
  - (ii) the proposed deadlines for implementation
  - (iii) potential synergies with prospective operations of counterparts in Jamaica (e.g., WB prospective 2024 Development Policy Operation)
- WB cautioned that executive and legislative approval processes in Jamaica were lengthy; IMF adjusted deadlines to account for these constraints.

### Stage 3 — Technical Assistance (TA) complementarity
- IMF organized meetings with WB and IDB to identify TA areas suitable based on each institution’s expertise.
- TA complementarity builds on prior information sharing and reform discussions.

### Engagement with other development partners
- IMF team engaged with Global Affairs Canada (GAC) office in Kingston during its December mission.
- GAC will help Jamaican authorities develop a climate financing agenda and coordinate development partners working group in Jamaica to focus on climate change related goals.

---

### Appendix I. Written Communication (selected substantive points)

### Macroeconomic and fiscal track record and buffers
- Over the decade preceding the pandemic, public debt fell from more than 140 percent of GDP in 2010 to 94 percent in 2019.
- By end 2021, the public debt to GDP ratio was already at pre-pandemic levels.
- Resource buffers referenced:
  - (i) fiscal buffers from privatizations and reforms in 2019/20 and dividend transfers in April 2021 from the BOJ’s restored profitability over 2018-2020
  - (ii) external buffers from a strong foreign reserve position under a flexible exchange rate and inflation targeting regime
  - (iii) resilience buffers accumulated in 2018-19 to counter natural disaster impacts

### Recent shocks, recovery, and outlook
- Growth in 2021 was supported by recovery in services and goods producing industries; tourism rebounded to pre-crisis levels by mid-2022 after lifting COVID entry restrictions.
- Major external downside risks identified: the terms of trade shock from the war in Ukraine, tightening global financial conditions, and expected deceleration in global growth.
- Growth is expected to remain above potential this year and next and converge to the pre-pandemic trend afterwards.
- Monetary policy tightening and fading commodity shocks expected to aid inflation convergence to the targeted corridor; combined with tourism recovery, the current account deficit is expected to fall.

### Climate change and disaster vulnerability
- Climate change and natural disasters are highlighted as major threats to Jamaica’s development prospects despite Jamaica’s insignificant contribution to global carbon emissions.
- Tourism provides foreign exchange inflows equivalent to about 20 percent of GDP and has significant positive spillovers to retail trade, construction, agriculture, and other services.
- Adverse climate impacts cited include: reduced agricultural productivity; impacts on availability and quality of food, energy, and water; loss of forested areas and biodiversity; and adverse health outcomes.
- Severe weather events damage physical capital, disrupt labor markets and supply chains, divert resources to reconstruction, and can lead to borrowing that adds to public debt and may threaten fiscal and financial stability.

### Energy import dependence and electric mobility context
- FY 2021/22: fuel commodity imports costed 11 percent of GDP or twice the level of Jamaica’s goods exports.
- Over 85 percent of Jamaica’s electricity production is derived from hydrocarbon sources, mostly heavy fuel oil.
- Mass public transportation is underdeveloped; there is over-reliance on cars and taxis leading to high per capita petrol consumption compared to regional peers.
- The high fuel import bill and war-driven price increases underscore the need to transition to renewable energy sources and support policies like electric mobility.

### Structural reform progress (post-2019)
- Key reforms referenced:
  - a. Amendments to the Bank of Jamaica Act in December 2020: asserted BOJ independence; principal objectives include maintenance of price stability and financial system stability (primary objective: price stability); clarifies BOJ functions.
  - b. Law mandating establishment of an Independent Fiscal Commission (approved last February): to strengthen fiscal responsibility framework and promote sound fiscal policy and management.
  - c. Reforms to public compensation framework to establish a wage structure that is simple, fair, equitable, sustainable, affordable, and fit for attracting talent and recognizing performance; implementation within the Fiscal Responsibility Law fiscal envelope.
  - d. Financial sector reforms: adoption of Basel III regulation, risk-based supervision, expanding regulatory remit of the central bank, progress towards a special resolution regime, and implementation of National Risk Assessment (published August 2021) and an action plan with FATF.

### IMF support requested and rationale
- Requested IMF arrangements:
  - 24-month Precautionary and Liquidity Line (PLL) arrangement in the amount of SDR727.51 million (190 percent of quota), intended to be treated as precautionary.
  - Resilience and Sustainability Facility (RSF) support in the amount of SDR574.35 million (150 percent of quota).
- Purpose:
  - PLL: shield efforts to secure macroeconomic stability and support reform implementation against potential global shocks; support structural reforms targeting remaining vulnerabilities.
  - RSF: help catalyze private financing and multilateral support to spearhead structural reforms aimed at reducing vulnerabilities to climate events and implement an ambitious climate agenda.
- Immediate priority: secure Fund support through readily available resources in case global shocks threaten development progress and macroeconomic stability.
- Longer horizon: reforms supported by these arrangements would accelerate implementation of public policy reforms for stronger, more inclusive growth while enhancing macroeconomic resilience and reducing balance of payments vulnerabilities from climate-change related events.

### Policy priorities under the PLL and related structural measures
- PLL policy focus areas:
  - (i) financial integrity, addressing strategic vulnerabilities of the AML/CFT regime
  - (ii) financial supervision and regulation
  - (iii) the data adequacy framework
  - Continued work on fiscal policy framework to preserve fiscal and debt sustainability.
- Procurement transparency:
  - Plan to reform regulations to require collection and publication on the Ministry of Finance website of beneficial ownership information of awarded companies; initial publication done for companies awarded COVID-related contracts by public agencies.
- AML/CFT and Companies Act amendments (Structural Benchmark):
  - Submission to Parliament of Amendments to the Companies Act (CA) to:
    - (i) ensure that the definition of beneficial ownership (BO) is amended in line with the Financial Action Task Force international standards;
    - (ii) have effective, proportionate, and dissuasive sanctions for legal persons and legal arrangements when they breach their BO obligations;
    - (iii) ensure that the Registrar of Companies is granted powers to ensure compliance, monitor and verify that basic and BO information held by legal companies is accurate and timely updated.
  - Structural Benchmark timing: end-March 2023.
- Basel III adoption roadmap:
  - Phase I: publication of the Standard of Sound Practice for Capital Adequacy (SSP) setting minimum capital requirements for credit, market, and operational risk components under Pillar 1 and the revised definition of regulatory capital. Work ongoing to make the SSP into a capital adequacy regulation.
  - Phase II: Pillar 2, including the Internal Capital Adequacy Assessment Process (ICAAP), Supervisory Review and Evaluation Process (SREP), framework for designating Domestic Systemically Important Financial Institutions (D-SIFIs), and execution of quantitative impact studies (QIS) by licensed DTIs.
  - Phase III: Pillar 3, focusing on market disclosures, consultation and implementation of additional capital and liquidity measures — including capital buffers and the Net Stable Funding Ratio (NSFR).

*Source: Annex V. Inter-Institutional Collaboration for the RSF; Appendix I. Written Communication — excerpted from the provided IMF content unit.*

### 16.      We continue to expand application of risk-based supervision and the regulatory perimeter

### 1jamea2023002 - 16.      We continue to expand application of risk-based supervision and the regulatory perimeter

### Expansion of regulatory perimeter and risk-based supervision
- Credit union cooperatives will be brought under the regulatory perimeter of the Ministry of Finance and the BOJ via an amendment to the Co-operative Societies Act.
- The bill will be presented to Parliament jointly with the proposed Credit Unions (Special Provisions) Act, which contains prudential requirements for credit unions.
- The Credit Unions (Special Provisions) Act will cover licensing, capital, reserves, prohibited business, and intervention processes—defining the role of authorized credit unions and allowing the BOJ to monitor their operations.

### Strengthening the regulatory framework (planned actions and benchmarks)
- a. Strengthen the regime for resolution of non-viable financial institutions:
  - Work on the Special Resolution Regime (SRR) started in October 2017.
  - The Technical Working Group is preparing a draft law to establish administrative resolution powers for systemically important financial institutions and modify the insolvency component for non-systemic financial institutions.
  - Structural Benchmark: end-March 2024.
- b. Publish a methodology to identify systemically important (bank and non-bank) financial institutions.
  - Structural Benchmark: end-September 2023.
- c. Advance supervision of financial holding companies (FHCs):
  - The Banking Services Act requires financial groups with DTIs to establish an FHC to be licensed and supervised by the BOJ.
  - In May 2021, the BOJ granted a first FHC license and commenced an ongoing pilot monitoring exercise including development of supervisory strategies.
  - The BOJ is intensifying supervisory efforts and collaboration with regulators through a regional Consolidated Supervision Group established in 2021.
- d. Expand supervisory remit of the Financial Services Commission (FSC):
  - The FSC launched a risk-based supervision framework in November 2021 applicable to financial groups not comprising DTIs.
  - The FSC is preparing an amendment to be tabled in Parliament to enhance the framework for consolidated supervision.
  - Structural Benchmark: end-September 2023.

### Improvements in evidence-based policymaking and statistical capacity
- Progress made in:
  - national accounts and price statistics (including rebasing and updating national accounts methodology, and an updated Household Expenditure Survey),
  - government finance statistics,
  - monetary and financial statistics,
  - balance of payments.
- Support received from CARTAC and STA.
- Jamaica has participated in GDDS since 2003 and plans to subscribe to the SDDS.
- A committee comprising representatives from the MOF, BOJ, and STATIN will be formed to engage with the IMF Statistical Department to identify gaps in data coverage, timeliness, and dissemination practices.
  - Structural Benchmark: end-March 2023.
- A diagnostic STA mission will take place before the first review to inform needed benchmarks to be agreed at the first review.

### Climate change resilience and the role of the RSF
- Rationale:
  - Jamaica contributes little to carbon emissions but has increased vulnerabilities to climate change: higher temperatures, sea level rise, and more frequent natural disasters including droughts, hurricanes, storms, and floods.
- Role of the RSF:
  - RSF concessional resources are intended to catalyze private sector financing and support from development partners, facilitate integration of climate agenda in macroeconomic policy formulation, and strengthen resilience to climate change vulnerabilities.

### Climate reform agenda (three pillars and timelines)
- Pillar 1 — Adaptation and resilience (reforms to be completed between March 2023 and March 2024):
  - Reform the Public-Private Partnership (PPP) policy to include climate requirements from project identification to contract management, and revise the PPP Standard Operating Procedure Manual to include these requirements.
  - Adopt a National Natural Disaster Risk Financing (DRF) policy.
  - Adopt methodologies to conduct climate risk assessments at project appraisal stage and incorporate the methodology in the Public Investment Management System (PIMS) handbook.
  - Define and publish project selection criteria including climate change criteria.
  - Conduct and publish in the Fiscal Risk Statement quantitative analysis of the fiscal risks generated by climate change.
  - Establish a National Natural Disaster Reserve Fund (NDRF) and financial regulations for transparent administration and reporting of the NDRF.
- Pillar 2 — Mitigation and decarbonization (reforms to be completed between June 2023 and September 2023):
  - Aim to convert about half of total electricity generation capacity to renewables by 2030.
  - Submit to parliament an electric vehicle policy that sets functional standards and regulations for electric mobility, defines energy sector guidelines for electric mobility accommodation, develops operational codes to promote adoption of electric vehicles, and sets guidelines for the development of an electric mobility ecosystem.
  - Approve guidelines adapted to the type and purpose of structures to reduce energy use in existing and newly constructed public buildings.
  - Submit to parliament a bill to incentivize investment in renewables through fiscal measures.
- Pillar 3 — Greening the financial system (actions to be completed between December 2023 and June 2024):
  - Publish a climate risks assessment with diagnostic of climate and environmental risks and define a timeline to embed these risks in supervisory activities and related databases for the development of climate risks assessments.
  - Adopt a monitoring framework and reporting requirements for financial institutions to implement Climate Related Financial Risks stress testing and for the BOJ to integrate climate risks in supervision and macroprudential policy formulation.
  - Establish an institutional framework for green-bond issuance and trading to open new avenues for private climate-related financing.

### Program governance, timelines, and commitments
- The RSF agenda complements Jamaica’s Updated NDC and the authorities will share lessons across responsible institutions to improve implementation.
- Reporting and reviews:
  - Present relevant information on economic and policy developments within the framework of this letter and the Fund’s Articles of Agreement ahead of the semi-annual reviews.
  - Semi-annual reviews expected to be completed no later than August 31, 2023, February 29, 2024, and August 31, 2024.
- Performance and monitoring:
  - Authorities will observe standard performance criteria on trade and exchange restrictions, bilateral payment agreements, multiple currency practices, and non-accumulation of payment arrears on external debt.
  - Authorities will provide the Fund with needed information to monitor the program under the PLL and RSF arrangements.
- Program outlook:
  - The authorities will treat the PLL as precautionary.
  - The risks that could trigger the drawings are likely to dissipate in the next two years.
  - Jamaica is expected to be in a strong position to exit the PLL by end-2024 once external risks subside, and external buffers continue to grow.

*Source: 1jamea2023002 - 16.      We continue to expand application of risk-based supervision and the regulatory perimeter*

### 29.      Finally, we authorize the IMF to publish this statement, its attachments, and the staff report

### 1jamea2023002 - 29.      Finally, we authorize the IMF to publish this statement, its attachments, and the staff report

### Authorizations and Signatories
- The IMF is authorized to publish this statement, its attachments, and the staff report for this request in line with the commitment to transparency.
- Signatories:
  - Nigel Clarke, DPhil., MP — Minister of Finance and the Public Service
  - Richard Owen Byles — Governor, Bank of Jamaica

### PLL Quantitative Targets (Table 1)
- Indicative Targets as of:
  - March 31, 2023
    - Overall Fiscal Balance of the Central Government (floor): JD 7,506 million
    - Net International Reserves (floor): US$ 3,535 million
  - Sept. 30, 2023
    - Overall Fiscal Balance of the Central Government (floor): JD 3,625 million
    - Net International Reserves (floor): US$ 3,620 million
- Note: Source: IMF staff estimates.
- Note: 1/ Cumulative flows from April 1 through March 31.

### PLL Structural Benchmarks (Table 2)
- Data Adequacy
  - A. Cabinet to formally establish a National Statistical Committee comprising representatives of the BOJ, the MFPS, and STATIN; Committee to approve an Action Plan to Subscribe to the SDDS; monitor and make recommendations to ensure its implementation.
    - Timing: March 31, 2023
- Financial Regulation
  - A. Submit the Special Resolution Regime law to parliament to strengthen the resolution of non-viable financial institutions while protecting financial stability and the public funds, in line with Fund staff recommendations.
    - Timing: March 31, 2024
  - B. Publish a methodology via a BOJ consultation paper to identify systemically important (bank and non-bank) financial institutions and identify such institutions.
    - Timing: September 30, 2023
  - C. Submit to parliament amendments to establish supervision by the Financial Services Commission of financial conglomerates without a deposit taking institution.
    - Timing: September 30, 2023
- Financial Integrity
  - A. Submit to Parliament an amended Companies Act to:
    - (i) ensure that the definition of beneficial ownership is amended in line with the Financial Action Task Force international standards;
    - (ii) have effective, proportionate, and dissuasive sanctions for legal persons and legal arrangements when they breach their BO obligations; and
    - (iii) ensure that the Registrar of Companies is granted with powers to ensure compliance, monitor and verify that basic and BO information held by legal companies is accurate and timely updated.
    - Timing: March 31, 2023

### Reform Measures Under the RSF (Table 3)
- Pillar 1: Building Fiscal and Physical Resilience to Natural Disasters and Climate Change
  - RM1: MOFPS to adopt a National Natural Disaster Risk Financing (DRF) policy.
    - Target Date: 1st PLL Review (End-June 2023)
  - RM2: Development Bank of Jamaica in consultation with the MOFPS to modify the PPP policy Program to include climate requirements in PPP project agreements and revise PPP Standard Operating Procedure Manual.
    - Target Date: 1st PLL Review (End-March 2023)
  - RM3: Public Investment Appraisal Branch (PIAB) to define a methodology to conduct climate impact assessments at project appraisal stage and incorporate into PIMS handbook.
    - Target Date: 2nd PLL Review (End-Dec. 2023)
  - RM4: Planning Institute of Jamaica (PIOJ) to define and publish project selection criteria including climate change criteria.
    - Target Date: 2nd PLL Review (End-Dec. 2023)
  - RM5: MOFPS to conduct and publish in the Fiscal Risk Statement quantitative analysis of the fiscal risks generated by climate change.
    - Target Date: 3rd PLL Review (End-March 2024)
  - RM6: MOFPS to submit to parliament an amendment to the Financial Administration and Audit Act to establish a National Natural Disaster Reserve Fund (NDRF) subaccount under the consolidated fund account and approve financial regulations for transparent administration and reporting of the NDRF.
    - Target Date: 2nd PLL Review (End-Dec. 2023)
- Pillar 2: Strengthening Mitigation/Promoting Renewables
  - RM7: MOFPS to submit to parliament a bill to incentivize investment in renewables through fiscal measures.
    - Target Date: 3rd PLL Review (End-June 2024)
  - RM8: Ministry of Science, Energy and Technology (MSET) to submit to parliament the electric vehicle policy, in line with the objectives in paragraph 23 of the Written Statement.
    - Target Date: 1st PLL Review (End-June 2023)
  - RM9: MSET to approve guidelines to reduce energy use in schools, hospitals, and public buildings for existing and new structures.
    - Target Date: 1st PLL Review (End-June 2023)
- Pillar 3: Greening the Financial Sector
  - RM10: BOJ to publish a climate risks assessment (including a diagnostic of related climate and environmental risks) and define a timeline to embed these risks in supervisory activities and related databases.
    - Target Date: 2nd PLL Review (End-Dec. 2023)
  - RM11: Adopt a monitoring framework that improves data collection and establishes reporting requirements for financial institutions to implement Climate Related Financial Risks stress testing and for the BOJ to gradually integrate climate risks in supervision and macroprudential policy formulation.
    - Target Date: 3rd PLL Review (End-June 2024)
  - RM12: Establish an institutional framework for green-bond issuance and trading.
    - Target Date: 3rd PLL Review (End-June 2024)
- Note: The reform measures in Table 3 have been discussed with the IDB’s and the World Bank’s experts and deepen synergies with the IDB’s and WB’s efforts in the areas covered by the reform measures.

### Technical Appendix — Monitoring Definitions and Targets (Attachment I)
- Indicative targets (IT) set for end-March 2023 and end-September 2023 under first year of PLL arrangement.
- Cumulative Floor of the Central Government Fiscal Balance
  - Fiscal balance defined as total revenues minus total expenditures; covers government activities as specified in the budget.
  - Revenues recorded when funds are transferred to a government revenue account; revenues include grants.
  - Capital revenues exclude revenues from divestment operations.
  - Central government expenditure recorded on a cash basis and includes compensation payments, other recurrent expenditures, and capital spending.
  - Government-funded PPPs treated as traditional public procurements.
  - Total expenditure includes transfers to other public bodies which are not self-financed.
  - Costs associated with divestment operations or liquidation of public entities allocated to current and capital expenditures accordingly.
  - Expenditures directly settled with bonds (except provision for losses of the Bank of Jamaica) or any other form of non-cash liability recorded as expenditure financed with debt issuance and will affect the overall fiscal balance.
  - Reporting: Data will be provided not later than six weeks after the test date.
- Definition of Central Government for monitoring purposes: set of institutions currently covered under the state budget; includes public bodies financed through the Consolidated Fund. Fiscal year starts on April 1 and ends on March 31.
- Public Sector definition for arrangement monitoring: “Specified Public Sector” (SPS) under the Fiscal Responsibility Law (FRL) — central government and self-financed public bodies not deemed “commercial” by the OAG; excludes the Bank of Jamaica (BOJ). (Extensive list of included self-financed public bodies provided in text.)
- Floor on the Stock of Net International Reserves of the BOJ (NIR-BOJ)
  - Defined as the U.S. dollar value of gross foreign assets of the BOJ minus gross foreign liabilities.
  - Gross foreign assets defined per BPM6 as readily available claims on nonresidents denominated in foreign convertible currencies; include BOJ holdings of monetary gold, SDR holdings, foreign currency cash, foreign currency securities, liquid balances abroad and the country’s reserve position at the Fund.
  - Excluded from reserve assets: assets pledged, collateralized, or encumbered; claims on residents; claims in foreign exchange arising from derivatives vis-à-vis domestic currency; precious metals other than gold; assets in nonconvertible currencies and illiquid assets.
  - Gross foreign liabilities include all foreign exchange liabilities to nonresidents (excluding liabilities to residents), including commitments to sell foreign exchange from derivatives and all credit outstanding from the Fund but excluding credit transferred by the Fund into a Treasury account to meet the government’s financing needs directly.
  - In deriving NIR, credit outstanding from the Fund is subtracted from foreign assets of the BOJ. GOJ foreign liabilities are excluded from gross foreign liabilities of the BOJ.
  - Non-U.S. dollar denominated foreign assets and liabilities converted into U.S. dollar at the arrangement exchange rates except for items affecting government fiscal balances, which will be measured at current exchange rates.
  - Arrangement exchange rates are those that prevailed on December 14, 2022.

### Arrangement Exchange Rates (Table 1)
- 1 USD = 154.2889 JMD
- 1 SDR = 205.8055 JMD
- 1 EUR = 165.3159 JMD
- 1 CAD = 112.8969 JMD
- 1 GBP = 188.7903 JMD
- 1 CHF = 166.5378 JMD
- 1 CNY = 22.2002 JMD
- Note: 1/ Average daily selling rate of December 14, 2022

### Adjusters and External Disbursements (Baseline Projection) (Table 2)
- NIR targets adjusted by surplus (shortfall) in expected loan disbursements from multilateral institutions (IBRD, IDB and CDB) and commercial loans guaranteed by multilateral sources, relative to baseline projection.
- NIR targets adjusted by surplus (shortfall) in grants or loan disbursements to the central government that are purchased by or deposited at the BOJ, relative to baseline.
- Table 2. Jamaica: External Disbursements (Baseline Projection) — Cumulative flow from Dec 31, 2022 (in US$ million)
  - Budget Support Grants
    - End-March 2023: 11.37
    - End-September 2023: 36.97
  - Multilateral Loans
    - End-March 2023: 0.00
    - End-September 2023: 0.00
  - Loans Guaranteed by Multilaterals
    - End-March 2023: 0.00
    - End-September 2023: 0.00
- Reporting: BOJ to provide data to the Fund with a lag of no more than 10 days after the test date.

### Payment Arrears and Review Timing
- Government policy: all external obligations will be met on time and with no delays; policy also to pay domestic obligations on time, including commercial loans, treasury bills, notes, and bonds.
- Payment arrears defined as external debt service obligations (principal and interest) not paid when due on central government and central government guaranteed debt. Overdue debt and debt-service obligations in dispute will not be considered external payment arrears.
- Timing of reviews (assuming IMF Executive Board approval on March 1, 2023):
  - First review: completed by no later than August 31, 2023
  - Second review: completed by no later than February 29, 2024
  - Third review: completed by no later than August 31, 2024

### World Bank Assessment Letter — Country Vulnerability to Climate Change (Selected Findings)
- Development context
  - Jamaica reduced public debt-to-GDP ratio by over 50 percentage points following an austerity program launched in 2013.
  - Jamaica experienced historically low real GDP growth of around 1 percent.
  - Poverty rate lowered by 17.4 percentage points between 1990 and 2019.
- Exposure and sensitivity
  - Nearly two-thirds of Jamaicans live within two kilometers of the coast.
  - Coastal zone houses three-quarters of the country’s industry and its dominant tourism sector, which combines to generate about 90 percent of GDP.
  - Recent estimates: 14.5 percent of the population lives in high-risk flood zones, with about 118,000 of them likely to be poor (living on less than $5.50 per day).
- Recent disaster impacts (examples cited)
  - Hurricane Ivan (2004) caused damages and losses of US$580 million with over half of physical asset damages on houses.
  - Damage to roads and bridges accounted for approximately 75 percent (US$159 million) of damages from Hurricane Gustav (2008).
- Sectoral impacts and projections
  - Under a 4.3°C scenario, a 1-in-100-year hurricane event could cause damages and losses of more than $98 million to the tourism sector alone.
  - Jamaica’s GHG emissions in 2018 were 10.2 MtCO2e; emissions peaked at 14 MtCO2e in 2006.
  - Sectoral shares of 2018 emissions:
    - Industrial and electricity generation sectors: 62 percent of total emissions
    - Industrial emissions (including industrial processes and manufacturing/construction): 32 percent of overall emissions
    - Electricity/heat sector: 30 percent of total emissions
    - Transport emissions: 20 percent of total emissions
  - Projection: GHG emissions could grow by 50 percent by 2050 under a baseline of no climate action (including no action on commitments in updated NDC of 2020); growth led by industrial production, electricity, and transport sectors.

*Source: Jamaica — Request for an Arrangement under the Precautionary and Liquidity Line and Request for an Arrangement under the Resilience and Sustainability Facility (excerpts as provided).*

### 5.      The Government of Jamaica has gradually integrated climate change adaptation

### 5.      The Government of Jamaica has gradually integrated climate change adaptation efforts into its policy framework and sector policies

### Climate change adaptation and disaster risk management (findings)
- Vision 2030 Jamaica: National Development Plan (NDP) positions climate change adaptation as a national development priority and guides implementation through medium-term national strategies and sector-level programs.
- The Climate Change Policy Framework for Jamaica is intended to support Vision 2030 goals and to facilitate development and implementation of risk reduction measures across sectors through:
  - strengthened climate change governance arrangements;
  - improved water resource management; and
  - enhanced disaster risk financing.
- Disaster risk management (DRM) framework and policies developed or strengthened include:
  - Natural Hazard-Risk Reduction Policy (2005);
  - Building Code Bill (2013); and
  - DRM (Amendment) Act (2021) — the primary policy tool for DRM.
- Financial and institutional measures to strengthen fiscal resilience to natural hazard shocks:
  - membership in the Caribbean Catastrophe Risk Insurance Facility (multi-country risk-pooling);
  - establishment of a National Disaster Fund to finance emergency response and rehabilitation; and
  - adjustments to public financial management procedures to improve efficiency in disaster response.
- Social protection enhancements include a portfolio of programs across social insurance, labor market programs, and social assistance to improve equity and social resilience.

### Climate change mitigation and emissions priorities (findings)
- Jamaica submitted an updated NDC in June 2020 with targets:
  - unconditional target of 25.4 percent reduction in emissions relative to business-as-usual by 2030; and
  - conditional target of 28.5 percent reduction in emissions relative to business-as-usual by 2030.
- Emissions reductions composition (as reported):
  - 83 percent of the unconditional reductions comes from the energy sector given plans to ramp up renewables in the power sector;
  - 17 percent of these reductions come from the land use change and forestry sector due to the ‘No Net Loss of Forestry’ commitment and the initiative to plant 3 million trees.
- Sectoral and strategic policies contributing to mitigation:
  - National Energy Policy (2010) establishing a goal of 20 percent renewable energy in the energy mix by 2030.
  - A new Integrated Resource Plan in preparation that sets out Jamaica's 20-year plan for the sector, including increasing the share of renewable energy from 12 percent (current) to 30 percent.

### Institutional capacity, financing gaps, and investment needs (findings & implications)
- Major challenges: institutional capacity gaps and financing constraints to decarbonize and build climate resilience.
- Identified institutional-strengthening areas include:
  - infrastructure and urban planning;
  - integrated coastal zone management; and
  - development of insurance and risk transfer instruments and use of climate data.
- Fiscal space is expected to remain limited over the medium term.
- Investment need for NDC commitments:
  - total upfront investment need for the sixteen commitments underpinning Jamaica’s revised NDC is estimated at US$921.1 million, with around 76 percent of this funding coming from private sources.
- Policy/financing responses recommended:
  - boost fiscal space and explore innovative climate finance instruments (e.g., Public Private Partnerships (PPPs), green bonds and other sustainability linked financing) to bridge financing gaps and mobilize additional funding.
  - pursue policies and investments to harness the value of a nature-based economy for the low-carbon transition.

### World Bank engagement (findings)
- The World Bank supports Jamaica’s resilience and mitigation efforts via instruments including Development Policy Financing (DPF), Investment Policy Financing (IPF), and technical assistance (TA).
- Examples of Bank-supported activities:
  - Jamaica Disaster Vulnerability Reduction Project to enhance resilience by (i) improving government capacity to generate and use hazard and risk information and (ii) reducing vulnerability by making infrastructure more resilient.
  - DPFs since 2020 (Economic Resilience DPF and COVID-19 Response and Recovery DPF) supporting adaptation reforms and green transition in energy.
  - Support for private sector resource mobilization via a Catastrophe Bond and PPPs in energy and infrastructure.
  - Assistance to Jamaica Generation Procurement Entity to strengthen capacity for renewable energy tender auctions.
  - Technical assistance supporting the NDC update and translation into a low-emission, climate-resilient development plan and preparation of low emission development pathways and related strategy up to 2050.

### IMF program linkages: PLL, RSF, and climate-related conditionality (findings and reform measures)
- Jamaican authorities requested IMF support via:
  - a 2-year Precautionary Liquidity Line (PLL) arrangement for SDR 727.51 million (190 percent of quota); and
  - a concurrent Resilience and Sustainability Facility (RSF) arrangement for SDR 574.35 million (150 percent of quota).
- Economic projections and near-term risks:
  - staff and authorities expect robust growth of 3.5 to 5.5 percent in FY 2022/23 and a current account deficit of less than 3 percent of GDP;
  - external stress is elevated and expected to remain so through end-2024 in both the baseline and downside risk scenarios.
- RSF conditionality and climate reform architecture:
  - Staff distilled climate priorities into twelve (12) reform measures grouped in three (3) pillars:
    - Building Fiscal and Physical Resilience to Natural Disasters and Climate Change (6 reform measures), including adoption of a National Natural Disaster Risk Financing Policy and passage of legislation establishing a reserve fund to cope with natural disasters; incorporation of climate considerations into fiscal policy risk assessments, public investment appraisal and assessment processes, and PPP frameworks.
    - Increasing Energy Efficiency and Promoting Renewable Energy, including passage of legislation providing fiscal incentives to increase investment in renewables; establishment of an electric vehicle policy; and approval of guidelines on increasing energy efficiency in public buildings.
    - Greening the Financial Sector, including setting up an institutional framework for green-bond issuance and trading; assessing climate risks and developing a timeline to incorporate these risks into supervisory activities; and building capacity to monitor climate change risks in the financial system.
- Estimated scope and balance-of-payments (BOP) implications:
  - Staff estimate that the RSF policy reform measures could spur implementation of likely climate-related projects costing about US$2.4 billion.
  - About half of these costs would be for imports, affecting Jamaica’s BOP by adding about one (1) percent of GDP per year to its current account deficit from 2024 to 2030.
- Debt and repayment assessment:
  - staff assess that Jamaica’s debt will remain sustainable with high probability and its capacity to repay the Fund is adequate.
  - The RSF would increase Jamaica’s debt servicing obligations to the Fund, but it would remain below that of its 2015 program.
- PLL structural benchmarks and financial sector reforms:
  - PLL program includes structural benchmarks related to financial stability, oversight, and AML/CFT improvements consistent with the FATF action plan.
  - Authorities committed to establishing a National Statistics Committee by end of March 2023 to approve an action plan to subscribe to the SDDS and monitor agreed statistical actions.
  - Authorities agreed to complete a structural benchmark to ensure compliance with FATF requirements on beneficial ownership by the end of March 2023.
  - Progress noted on inclusion of the legal profession under AML/CFT supervision and addressing FATF action items (nine (9) of the 13 action items are addressed/largely addressed as reported).

### Policy implications and priorities (policy recommendations implicit in the text)
- Strengthen institutional frameworks across government for formulation, implementation and enforcement of climate change policies, including:
  - infrastructure and urban planning;
  - integrated coastal zone management; and
  - development and deployment of insurance and risk transfer instruments.
- Mobilize additional financing via:
  - innovative climate finance instruments (e.g., PPPs, green bonds, sustainability-linked financing);
  - leveraging private-sector participation (noting an expected ~76 percent private share for NDC financing needs);
  - coordination with multilateral partners (e.g., World Bank) to scale project implementation.
- Prioritize reforms in the three RSF pillars to:
  - build fiscal buffers and disaster financing mechanisms;
  - accelerate renewable energy and energy efficiency adoption while managing short-term BOP impacts; and
  - green the financial sector to manage transition risks and incentivize private climate financing.

*Source: IMF staff report excerpt and statements on Jamaica, March 1, 2023.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1jamea2023002.pdf_