IMF Announces Agreement in Principle with Jamaica on a US$1.25 Billion Loan

Managing Director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, issued the following statement on Jamaica today:
“IMF staff and the Jamaican authorities today reached agreement, subject to final approval by the IMF Executive Board, on an economic programme supported by an SDR 802.5 million (about US$1.25 billion) loan under a 27-month Stand-By Arrangement. The programme could go to the Executive Board for approval in the next few weeks, pending some prior actions to be taken by the Jamaican Government. Approval of the SBA is expected to catalyze about US$1.1 billion in funding from other international financial institutions.
“Jamaica has been hit hard by the global financial crisis and has been suffering from years of subpar growth. Strong policies and an ambitious reform agenda are necessary now to start a process of transformation in the Jamaican economy. By streamlining public expenditure and reducing interest payments, Jamaica will have more resources available for investments in education and infrastructure. This will increase growth potential, reduce the vulnerability to external shocks, and put the country in a position to reap the benefits of a recovery in global growth. It is not an easy process, but I am confident in the strength of the policies proposed and the authorities’ commitment to implement them,” Mr. Strauss-Kahn stated.
“Protecting the most vulnerable Jamaicans is a key concern of this programme. To help soften the impact on the poor, the programme allows for at least a 25 percent expansion of the social safety net spending, in particular the Programme of Advancement through Health and Education (PATH), and the school feeding programme,” Mr. Strauss-Kahn added. The coverage of these programmes will be expanded to about 360,000 persons, from the current 325,000.
The programme has three main elements:

A fiscal consolidation strategy to streamline expenditure and reform the public sector; A comprehensive debt management strategy to reduce the Government’s interest bill; A reform to strengthen the financial system.
For additional information on IMF and Jamaica see: http://www.imf.org/external/country/JAM/index.htm