KINGSTON, Jamaica – The World Bank, Board of Directors on Thursday (Jan. 15), approved a US$100 million loan for Jamaica to assist the Government in improving fiscal management and debt sustainability.
Minister of Finance and the Public Service, Audley Shaw, who has been relentless in his efforts to access multilateral loans at favourable interest rates, said that, “this loan supports Jamaica’s efforts to reduce the country’s high level of debt and improve fiscal sustainability, which have constrained the country’s growth potential. These priorities have become even more relevant in the context of the current global financial market crisis and economic slowdown.”
The Minister also emphasised that addressing the country’s significant debt burden was critical to the achievement of the country’s development objectives. “We recognise that without reducing debt and controlling debt creation, public investment and social needs, such as improving health, education and addressing crime and violence, will not be met,” he added.
Meanwhile, World Bank Director for the Caribbean, Yvonne Tsikata, observed that the loan programme is closely aligned with the Government’s efforts to improve fiscal balances and reduce costly public debt in a sustainable fashion.
“Given the potential for decreased fiscal revenues under the current global environment, these efforts are particularly important as a means to enhance fiscal efficiency and help foster growth in the medium term through a better allocation of scarce public resources,” she stated.
Specifically, the loan will support the Government’s programme by containing expenditure through greater control of public sector balances and debt, including the divestment of loss-making commercial public enterprises; increasing the efficiency of public financial management and budgeting processes, as well as mechanisms to control spending; and reducing distortions and enhancing the efficiency and fairness of the tax system.
The US$100 million commitment-linked loan, with a variable spread over a six-month London Interbank Offered Rate (LIBOR), is payable in 30 years, including a five-year grace period.
The formal agreement will be signed by Minister Shaw and Ms. Tsikata on Friday, January 23, at the Ministry’s National Heroes Circle office.
