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

KINGSTON, Jamaica – Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), 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 program supported by an SDR 802.5 million (about US$1.25 billion) loan under a 27-month Stand-By Arrangement. The program 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 program. To help soften the impact on the poor, the program allows for at least a 25 percent expansion of the social safety net spending, in particular the Program of Advancement through Health and Education (PATH), and the school feeding program,” Mr. Strauss-Kahn added. The coverage of these programs will be expanded to about 360,000 persons, from the current 325,000.

The program has three main elements:
. A fiscal consolidation strategy to streamline expenditure and reform the public sector;
. A comprehensive debt management strategy to reduce the governments interest bill;
. A reform to strengthen the financial system.