Press Release: IMF Mission and Jamaican Authorities Reach Staff-Level Agreement on Key Elements for EFF-Supported Program
IMF News, February 15, 2013
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- Published: February 15, 2013
Overview of the staff-level agreement
- The mission reached a staff-level agreement with the Jamaican authorities on key elements of an economic program to be supported by a 48-month arrangement under the Extended Fund Facility (EFF).
- Arrangement amount: SDR479 million (about US$750 million or 175 percent of quota).
- The understandings are reflected in the authorities’ economic program as stated in the Letter of Intent to be reviewed by IMF Management and finalized before approval.
- IMF staff envisages that the IMF’s Executive Board would consider the proposed arrangement under the EFF by the end of March, subject to:
- the timely completion of prior actions to be taken by the Jamaican government; and
- obtaining necessary financing assurances.
Financing, debt exchange, and participation requirements
- The authorities have announced a debt exchange intended to reduce Jamaica’s medium-term financing needs and contribute to debt sustainability.
- Success of the program depends critically on a high rate of participation of private creditors in the debt exchange.
- Continued support is expected from international financial institutions and other official creditors; securing financing assurances is necessary for a Fund-supported program.
Economic challenges identified
- Over the last three decades, Jamaica has experienced:
- very low economic growth;
- declining productivity; and
- reduced international competitiveness.
- A core factor: Jamaica’s unsustainable debt burden, which has:
- undermined confidence; and
- elevated risks to economic stability.
- High debt service has limited the government’s ability to provide services needed for sustained growth and improved welfare.
Main objectives of the economic reform program
- Contain rising economic and external vulnerabilities and address economic imbalances.
- Put Jamaica on a path of sustainable growth.
- Promote macroeconomic and financial stability, including achieving and sustaining higher primary fiscal surpluses to underpin debt sustainability.
- Pave the way for private-sector-led growth through a comprehensive set of structural reforms.
- Promote social stability through enhanced social protection for the most vulnerable.
Policy measures and structural reforms envisaged
- Strengthen public finances through:
- comprehensive tax reform;
- expenditure rationalization; and
- improved public debt management and public financial management.
- Enhance resilience of the financial sector by strengthening:
- supervisory frameworks;
- regulatory frameworks; and
- crisis management frameworks.
- Improve growth-generating efficiency by:
- enhancing the business environment;
- increasing competitiveness; and
- strengthening institutional capacity and governance (including through a broad legislative agenda).
Social protection measures
- Protect the most vulnerable and promote economic self-reliance through:
- establishment of a floor on social spending;
- maintaining the real value of PATH (Program of Advancement through Health and Education) benefits;
- expanding re-certification; and
- expanding the Steps-to-Work program.
Key statistics and timeline
- EFF arrangement duration: 48-month arrangement.
- Proposed EFF amount: SDR479 million (about US$750 million or 175 percent of quota).
- Jamaica’s IMF quota: SDR273.5 million (about US$434 million).
- Timeline for IMF Executive Board consideration: by the end of March (subject to prior actions and financing assurances).
- Jamaica’s IMF membership date: February 21, 1963.
Press Release No. 13/51 — February 15, 2013