IMF Executive Board Approves US$968 Million under the Precautionary and Liquidity Line and US$764 Million under the Resilience and Sustainability Facility for Jamaica

IMF News, March 2, 2023

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Canonical URL: IMF Executive Board Approves US$968 Million under the Precautionary and Liquidity Line and US$764 Million under the Resilience and Sustainability Facility for Jamaica

24-month arrangement under the Precautionary and liquidity Line (PLL) with access of US$968 million (190 percent of quota).
Arrangement under the Resilience and Sustainability Facility (RSF) for US$764 million (150 percent of quota).
RSF is expected to catalyze funding for climate priorities from other official lenders and the private sector.
The PLL and RSF together provide insurance against global shocks and strengthen resilience to climate-related and transition risks.

PLL: provide insurance against risks from higher commodity prices, a global slowdown, tighter-than-envisaged global financial conditions, and new COVID outbreaks; support plans to improve financial supervision, the AML/CFT framework, and data reporting.
RSF: strengthen physical and fiscal resilience to climate change, advance decarbonization of the economy, manage transition risks; create incentives to switch to renewables, reduce energy consumption, develop green financial instruments, and require proper management of climate risks in the financial sector.
RSF reforms were prepared in close collaboration with the World Bank and other international partners and are expected to catalyze private and official financing for climate-related investment.

Recent shocks: COVID, the war in Ukraine, and tightening global financial conditions.
Recovery status: tourism has rebounded to pre-crisis levels; 2022 real GDP growth is expected to be around 4 percent.
Inflation: pushed above the Bank of Jamaica’s target band by global factors (in particular the impact of the war in Ukraine on commodity prices) but declining since mid-2022; inflation is expected to converge to the BOJ target range by end-2023.
External sector: high commodity prices have increased the current account deficit, but international reserves remain at healthy/adequate levels.
Financial sector: well-capitalized and liquid.
Outlook risks: the war in Ukraine may push commodity prices higher; a stronger-than-envisaged tightening of global financial conditions may curb capital flows and reduce remittances; new COVID variants could disrupt tourism and trade.

Fiscal policy: post-pandemic fiscal response was nimble in 2020, supporting the economy and then quickly resuming a downward path for the debt; the post-pandemic increase in the primary surplus is noted.
Monetary policy: the Bank of Jamaica has followed a data dependent tightening of monetary policy to secure convergence to the inflation target.
Institutional reforms underway or planned:
- Fiscal Commission to strengthen the fiscal responsibility framework.
- Public sector reforms to create a standardized and equitable pay structure for government employees that rewards performance.
- Efforts to strengthen tax and customs administration to support the revenue envelope.
- Amendments to the BOJ Act to strengthen the central bank’s autonomy and governance structures.
- Progress in the adoption of the Basel III framework and enhancement of oversight of the financial system.

US$968 million (190 percent of quota)
US$764 million (150 percent of quota)
24-month arrangement
2022 real GDP growth is expected to be around 4 percent
Inflation expected to converge to the BOJ target range by end-2023
Fiscal policy response to COVID in 2020 noted as supportive and then followed by debt-reducing measures

International Monetary Fund press release, March 2, 2023.