US$5 billion in 50 years - Jamaica’s half-century partnership with the IDB
Jamaica has benefited from, or is in the process of cashing in on, loans and other public- and private-sector development financing from the Inter-American Development Bank, IDB, amounting to more than US$5.1 billion for the 50 years of the bank’s operations since 1969.
This includes some US$361 million being considered, or already approved, for government and private-sector investment in Jamaica this year, but does not factor in a US$200 million Caribbean-wide risk-sharing loan facility approved for regional bank FirstCaribbean International on March 21.
General manager and country representative for Jamaica in the IDB’s Caribbean Country Department, Therese Turner-Jones, explains that the sovereign or state-support operations of the bank carries a different balance sheet from the private-sector investment arm, called IDB Invest.
The IDB group also includes the IDB Lab, formerly known as the Multilateral Investment Facility, MIF. The IDB regional head agrees that given the substantial funding, Jamaica has been slow in showing the commensurate growth and development. Still, she is convinced that the bank’s programmes have been impactful on the social and economic problems of the country.
“These resources, especially on the sovereign side, are at fairly good interest rates, pretty concessional, and the project lending also comes with expert advice. The difference between the IDB and a Scotiabank or an NCB is that we are looking at the impact any one project is going to have on the country and who are the beneficiaries,” says Turner-Jones
“Are we improving lives, or are we just in it for the money? And, we are not really in it for the money. Of course, the bank wants its money back, but it’s not a profit motive.”
The IDB’s 2019 projects for Jamaica, as listed on its website, includes a US$50-million loan to National Commercial Bank for “trade facilitation, trade logistics and customs,” which the IDB says is to “facilitate ongoing trade activity in Jamaica”. The loan is listed as having been approved on February 6.
Jamaica has been allocated US$400 million in IDB funding sovereign loan, grants and private -sector lending and financing guarantee assistance for 2019, Turner-Jones told the Financial Gleaner in an interview at the IDB’s Jamaica office in Kingston. She explains that country allocations are made after discussions with national governments and reflect the government’s priorities as well as the focus areas of the 48-member bank.
The IDB invests about US$13 billion a year in the Latin America and Caribbean region, with the Caribbean receiving an allocation of just under US$1 billion each year. The Caribbean office, which Turner-Jones head, covers Jamaica, The Bahamas, Barbados, Suriname, Guyana and Trinidad & Tobago.
Two-year programming cycles
The bank is now moving away from annual allocations and towards two-year programming cycles for both public-sector and private financing in member countries.
Already approved for Jamaica for 2019 is a US$480,000 “Jamaica global services sector – moving up the global value chain” technical cooperation project designed to leverage earnings from the higher end of the business process outsourcing, BPO, industry.
The project, which was announced by Finance Minister Dr Nigel Clarke in his Budget speech, seeks to train and insert more Jamaicans into the professional end of the BPO market involving legal services, medical technology and other value-added skills.
The IDB will also continue its support of innovative Jamaican businesses through a US$580,000 technical cooperation facility “to strengthen local capacity for developing a pipeline of early-stage innovative ventures, mostly technology-based, that contribute to catalysing firm productivity gains”.
Specifically, the project aims to support capacity to design, implement and evaluate innovation programmes within the framework of the IGNITE II programme being administered by the Development Bank of Jamaica.
Not yet approved, but listed as “being prepared”, is a US$285-million contingent loan for natural disaster emergencies. This financial market-risk facility is expected to help mitigate the impact that a severe or catastrophic natural disaster could have on the country’s public finances, by increasing the availability, stability, and efficiency of contingent financing to deal with emergencies caused by such events.
Jamaica is also expected to benefit this year from a US$25-million ‘Boosting Innovation, Growth and Entrepreneurship Ecosystems’ loan to support entrepreneurship and innovation.
The FirstCaribbean regional risk-sharing facility approved for the region, the bank said, will focus on tourism, small infrastructure and midsize companies.
Information supplied to the Financial Gleaner by the IDB shows that Jamaica joined the bank in 1969 and got its first loan approval in 1970 for a rural agriculture sector programme in the amount of $6.2 million.
Since then, Jamaica has benefited from IDB financing for 168 public-sector development projects, with total concessional lending approved of US$ 4.3 billion up to 2018. The IDB said that over the 50-year period, a total of US$407.11 million has been directed to private-sector project funding, including major infrastructure projects such as the Kingston Container Terminal port facility, in which it invested more than US$450 million, and the East-West leg of Highway 2000, which benefited from more than US$340 million.
In addition, MIF approved US$44.5 million and disbursed $33.4 million.
The IDB’s Jamaica country strategy 2016-2021 focuses on the improvement of public-sector management, increasing productivity and economic growth, and reinforcing human development.
Under the rubric of public management and modernisation of government and national systems, the IDB has been funding, to the tune of US$68 million, the controversial National Identification System, aspects of which are now the subject of a court challenge by the opposition People’s National Party.
The bank is also concerned about the cross-cutting areas of crime, climate and gender. Its ongoing programmes in Jamaica include reforms that directly improve business and innovation, increasing access to finance for small and medium enterprises, supporting efforts to achieve a sustainable health system, improvements in teaching and learning objectives outcomes, strengthen linkages of schools and labour market, and improving targeting and the overall effectiveness of PATH, the health and education social programme.
IDB-funded projects in Jamaica have also included the three-phase Citizen Security and Justice Programme, the Kingston metropolitan area water-improvement project, the privatisation of the Norman Manley International Airport, the Northern Coastal Highway, Kingston waterfront redevelopment, rural electrification, the capitalisation of the Students’ Loan Bureau, and the expansion of milk cattle breeding.