KINGSTON, Jamaica – Jamaica’s Minister of Finance and the Public Service, Hon Audley Shaw, has advised that even as the discussions continue for Jamaica to resume a borrowing relationship with the International Monetary Fund (IMF), the way has now been cleared for the country to access approximately US$320 million (J$28.5 billion) from the Fund by early next month.
During his recent presentation to the Inaugural Awards Banquet of the Cambio Association of Jamaica, in Kingston, the Minister explained that this facility represents a non-refundable allocation as an entitlement to deserving countries in good standing.
“The Board of Governors of the Fund has ratified a general allocation of Special Drawing Rights equivalent to US$250 billion to provide liquidity support to the global economic system by supplementing the foreign exchange reserves of member countries, including Jamaica. The money is scheduled to be paid to Jamaica and other IMF member states on September 9, and will go a far way in augmenting the country’s foreign exchange reserves,” the Minister explained.
The expected funds, the Minister added, represent a key plank in the Government’s immediate efforts to increase the resources available to the Bank of Jamaica.
With respect to the preparations for Jamaica’s formal request of US$1.2 billion (J$106 billion) from the IMF under a Stand-by Agreement, the Minister explained that the process is on track for the country’s submission to the annual IMF/World Bank in advance of the meeting of the institutions in October.
He reiterated the rationale for re-engaging a borrowing relationship with the IMF and the critical need for fiscal sustainability, and explained that this was particularly critical to the achievement of financial stability and lasting economic growth.
“The Government is committed to addressing the country’s fiscal problems. However, this will require difficult choices. Postponing those choices will only make them more difficult. Therefore, if we can agree on a sustainable long-run fiscal path now, this could yield considerable economic benefits in the form of lower interest rates, debt reduction and increased consumer and business confidence over the medium term,” the Minister emphasised.
Mr. Shaw further stated that the technical analysis by Government of Jamaica officials, supported by the IMF staff in their Article IV discussions, supported the position that unless there was an influx of new capital, Jamaica’s ability to remain current on its international obligations would deteriorate sharply this year.
“Without the assurance that these resources offer, the improvement in investor confidence that is necessary to underpin a reduction in interest rates will not occur. Maintaining order in the foreign exchange market and reducing borrowing costs are both crucial elements in building a stable environment that is friendly to investment, job creation and growth,” the Minister said.
