Press Release: IMF Executive Board Concludes Second Review Under Stand-By Arrangement with Jamaica and Approves US$49.2 Million Disbursement

IMF News, September 24, 2010

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Canonical URL: Press Release: IMF Executive Board Concludes Second Review Under Stand-By Arrangement with Jamaica and Approves US$49.2 Million Disbursement

The Executive Board concluded the second review of Jamaica’s economic performance under the Stand-By Arrangement (SBA).
Completion of the review enables the immediate disbursement of an amount equivalent to SDR 31.9 million (about US$49.2 million).
Total disbursements under the arrangement to date: SDR 509.9 million (about US$786.2 million).

"The program performance continues to be positive, with all end-June quantitative performance criteria met and all but one structural benchmark completed, owing to circumstances beyond the Jamaican authorities control."
Key macro outcomes and risks noted by management:
- Inflation is declining more rapidly than projected.
- Market confidence has improved, with interest rates falling to their lowest levels in many years.
- Incipient signs of a recovery; projected that growth will turn positive in the second half of the fiscal year.
- Fiscal performance remains on track with all quantitative performance targets met.
- Risks remain from the uncertain external economic environment, Jamaica’s still high debt level, and susceptibility to external shocks.
Policy emphasis: continued expenditure restraint, especially on the wage bill, is critical for meeting short-term fiscal targets and ensuring a shared burden of the fiscal adjustment.

The IMF’s Executive Board approved a 27-month SBA in an amount equivalent to SDR 820.5 million (about US$1.27 billion; 300 percent of quota) on February 4, 2010 (see Press Release No. 10/24).
Program pillars include:
- Fiscal consolidation and institutional reform, including fiscal responsibility legislation and Central Treasury Management.
- Public debt restructuring, which was completed as a prior action under the program.
- Financial sector reform, including measures to improve consolidated supervision and the regulation of non-banks.

Noted progress:
- Divestment of the Sugar Company of Jamaica.
- Completion of action plans for tax administration and central Treasury management reforms.
Priorities and recommendations:
- Ensure ongoing plans for public sector rationalization and tax incentives reform deliver gains in fiscal savings and economic efficiency.
- Continue reforms aimed at strengthening prudential requirements and the overall supervisory framework in the financial sector.

Quoted assessment:
- "Overall performance under the Stand-By Arrangement continues to be positive."
- Emphasized the need for "continued vigilance" given remaining risks.
- Reiterated importance of expenditure restraint and of further structural reforms to resolve underlying economic imbalances and strengthen the basis for strong and sustained growth.
- Confirmed that financial sector reforms "are proceeding satisfactorily."

Press Release No. 10/353, September 24, 2010.