Jamaica and EU Sign $2 Billion Agreement

In light of the widespread damage Jamaica sustained as a result of Hurricane Ivan in September, the European Union (EU) Commission has signed an agreement with the Government, to provide funding to rehabilitate and reconstruct the affected sectors.
The agreement, which is valued at $2 billion (25 million Euros), was signed today (December 10), at the National Heroes Circle offices of the Ministry of Finance and Planning.
In his address at the signing, Finance and Planning Minister, Dr. Omar Davies expressed gratitude on behalf of the administration.
He said it was envisaged that the financial support would be used to address some of the more critically needed areas. “In addition to the damage to the agricultural sector, and to individual homes, there is significant damage to the school system as well as other areas of social infrastructure, not to mention the physical infrastructure,” he noted. “We need to utilise these resources to address those highest on the priority list, and phase the implementation of other remedial works into 2005/6,”Dr. Davies added.
He informed that the Finance and Planning Ministry’s fiscal data had indicated that the close passage of Hurricane Charley, followed by the hit of Hurricane Ivan, had an obvious “negative impact in a variety of ways” for the country.
“Notwithstanding the negative impact on revenues, coupled with the call for additional expenditure, not only in this fiscal year, but also in fiscal year 2005/2006, the Government has took the policy decision to stay with the targeted programme to bring the fiscal accounts in balance in 2005 and 2006,” the Minister pointed out.
Dr. Davies acknowledged that although balancing the fiscal account would be a challenging undertaking, the Ministry decided it was in its best interest “to convey to our private sector creditors as well as our developmental partners, this was something we had to do”.
Head of the Delegation of the EU, Gerd Jarchow, in his address, reiterated that the funding “comes in response to the social distress and serious damage caused by Hurricane Ivan to the people and the economy of Jamaica”.
Mr. Jarchow recalled that in September when the hurricane struck, given the considerable loss of export earnings incurred by the banana sector, bauxite, tourism, and damage to the road network, the European Commission agreed to change its approach and to allocate these funds by way of untargeted budgetary support.
“This approach will allow a quicker response to the considerable needs faced by the Government of Jamaica in terms of reconstruction of lost physical assets, stabilisation of macro-economic conditions and balance of payments,” he said.
In addition to the EU’s $2 billion financing agreement, that for the most part will act as monetary relief to the government’s post-Hurricane Ivan reconstruction efforts, the EU has also committed another $75 million Euros to the Government. The funding, which the Government applied for in 2002 and the EU in principle, agreed on in 2003, is intended to cover macro-economic support as well as road transport development, particularly the construction of the highway from Ocho Rios to Montego Bay.