KINGSTON, Jamaica – (JIS) On Friday, January 23rd Jamaica’s Finance and Public Service Minister, Audley Shaw, and Director of the World Bank’s Latin American and Caribbean Management Unit, Yvonne Tsikata, signed a US$100 million ($8.49 billion) Development Policy Loan at the Ministry’s Heroes Circle offices in Kingston, to provide funding support for the Government’s fiscal and debt sustainability programme.
This programme is aimed at containing and reducing debt, enhancing revenues, and increasing the efficiency of public sector spending and investment.
Speaking at the signing, Mr. Shaw said the loan represents the World Bank’s single largest disbursement to Jamaica, and brings the amount of funding received from the multilateral agency over the last four years to US$217 million. He further informed that the loan brings to US$175 million, the amount of funds which the administration negotiated with the World Bank, since assuming office September 2007, and over US$500 million over the past two months. The latter figure includes: US$410 million from the IDB, in addition to the US$100 million signed off on Friday, January 23.
Finance and Public Service Minister, Audley Shaw (left), signs a copy of the agreement for a US$100M loan facility from the World Bank, while World Bank Director for the Latin American and Caribbean Country Management Unit, Yvonne Tsikata (centre), prepares to sign. Looking on at right is World Bank Special Representative in Jamaica, Badrul Haque.
The loan, which he pointed out, is being made available at an interest rate of 1.8 per cent, is to be repaid over 30 years, with a five-year moratorium period on the repayment of the principal. The facility, Mr. Shaw adds, will complement other initiatives being supported by the Inter-American Development Bank (IDB), through its competitiveness enhancement programme, and public financial management programme; the European Union (EU), under the general budget support programme; and the Caribbean Development Bank (CDB), which provides assistance with policy loans.
“These are very favourable terms, which indicate that you (World Bank) (and), your sister multilaterals have confidence in Jamaica. We need Jamaicans,… we need our entrepreneurs, we need the financial sector, we need everybody to support the confidence process. We need to be confident in our future. I am looking forward to this continuing relationship with the multilaterals, because, ultimately, it’s not just about borrowing money. It is about setting the stage for the transformation of the Jamaican economy from one that finds its way to finance its budget from borrowing.
“What we have got to do is create a transformation to wealth creation from our own production and productivity, so that we move from debt financing to financing from earnings. And the only way we can finance the budget from earnings is when we build the base for productivity in our country,” Mr. Shaw stated.
The Finance Minister said the administration is committed to realising a number of policy-based initiatives, thereby securing important and significant outcomes. These include: reducing the net public debt to Gross Domestic Product (GDP) ratio; increasing the efficiency of public financial management and budgeting processes; improving the capacity at the Auditor General’s Department, through staff training and improved facilities; reducing distortions and enhancing the efficiency and fairness of the tax system; and widening the tax net.
“I want to indicate that whether it is a development policy loan, as in the case of the Wold Bank, or it’s a policy-based loan, as it is in the case of the other development banks, as the Prime Minister recently pointed out, these policies target that we have set, are not being imposed upon us by the multilateral institutions,” he outlined.
“Rather, these are important development targets that are self-imposed. We are imposing them upon ourselves, as part of the strategy of delivering a higher quality of governance in the country… a more efficient form of government,” the Finance Minister added.
In her remarks, Mrs. Tsikata said the loan facility, which comes in response to the government’s request for assistance, and is the first of a series of measures which are to be supported by the World Bank and other development partners to help Jamaica deal with its debt, expressed the hope of continued “collaboration with the government and people of Jamaica.”
