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Finance and Public Service Minister, Audley Shaw, has said that the Government, since assuming office in September 2007, has successfully negotiated some US$951 million in loans from the World Bank, the Inter-American Development (IDB), and the Caribbean Development Bank (CDB).
Speaking at the signing of a fiscal and sustainability development policy loan agreement with the World Bank at the Ministry on January 23, Mr. Shaw said the figure comprises US$175 million from the World Bank; US$580 million from the IDB, inclusive of US$300 million in liquidity support for the private sector; and US$196 million from the CDB.
The World Bank’s fiscal and sustainability policy loan of US$100 million, has been made available to provide funding support for the government’s fiscal and debt sustainability programme. It is aimed at containing and reducing debt, enhancing revenue, and increasing the efficiency of public sector spending and investment.
Mr. Shaw informed that the latest World Bank loan brings the amount of funding, which the administration negotiated over the past two months, to more than US$500 million. Other loans secured during that period include: US$101 million in December, and US$329 million, which was signed off earlier this month, both with the IDB.
Against the background of the global economic downturn, and the funding negotiated, the Finance Minister said there was no need for panic and underscored the need for individuals to display confidence in the economy.
“We need to have confidence in our economy, we need to have confidence in our exchange rate. There is no need whatsoever for panic,” he stated, pointing out that the administration had shown “foresight” by approaching the multilaterals during the first few months into its term in office.
“From the first month after I was named Finance Minister, I was in Washington. And soon after that, we had the many missions coming here, and we have had the very supportive work of the World Bank and the other multilaterals working with us. So, when the implosion came, we were able to garner what we have garnered over the past several months. This has not been as a result of a knee-jerk reaction. This was as a result of the policy of my government…to engage with the multilaterals, and to self impose conditionalities that the country needs,” he stated.
The Finance Minister pointed out however, that long before the current global financial downturn, Jamaica was faced with its own “crisis” of a “lack of production, declining output and productivity, where too much of what we consume in this country, we have to import, although we have the capacity to produce it, here, ourselves.”
This crisis, he further argued, was compounded by the financial sector collapse of the 1990s. To this end, he stressed the need for the country’s productivity base to be strengthened, in order to facilitate a transformation, which will see financing from earnings rather than options that incur debts.
In her comments, Director of the World Bank’s Latin American and Caribbean Management Unit, Yvonne Tsikata, who co-signed the agreement with Mr. Shaw, said debt reduction could only be attained through sustained medium and long-term efforts, and decisive action by governments, noting that these priorities have become even more relevant in the context of the current global financial crisis and economic slowdown.
In this regard, she gave the Bank’s undertaking to continue its response to Jamaica’s requests as they arise. She underscored the need for countries to take the necessary steps to position themselves to deal with the challenges of the economic downturn.
“The global financial crisis hints at serious challenges for the year ahead and 2009 will, certainly, be a year for adjustments worldwide, but the crisis offers opportunities as well. This is the time for all countries to review policies, so as not to compromise the significant social development gains that have been achieved,” Mrs. Tsikata stated.