Mon | May 6, 2024

Ja to secure US$1.7b in IMF support

Published:Friday | December 16, 2022 | 2:11 AMSteven Jackson/Business Reporter
Pause
From left: Bank of Jamaica (BOJ) Governor Richard Byles; Dr Wayne Robinson, senior deputy governor, BOJ; Kamika Braithwaite (obscured), information and training officer at the Jamaica Society For The Blind; Conrad Harris, executive director, Jamaica Societ
Gladstone Taylor/Multimedia Photo Editor
From left: Bank of Jamaica (BOJ) Governor Richard Byles; Dr Wayne Robinson, senior deputy governor, BOJ; Kamika Braithwaite (obscured), information and training officer at the Jamaica Society For The Blind; Conrad Harris, executive director, Jamaica Society for the Blind; and Minister of Finance Dr Nigel Clarke examine a specimen of the new $2000 note at the launch of the new series at the Bank of Jamaica in Kingston on Thursday.
CLARKE
CLARKE
1
2

Jamaica has secured two new facilities from the International Monetary Fund (IMF), totalling US$1.7 billion, that will allow the country to transition to greener energy projects while providing a buffer for war sanctions and commodity shocks.

“Jamaica is in a relatively good position. We almost don’t need it, but it is a backstop that is available,” Finance Minister Dr Nigel Clarke said in making the disclosure on Thursday.

The loan totals US$763 million under the Resilience and Sustainability Facility (RSF) aimed at implementing green energy projects.

Also, the country received a line of credit up to US$967 million under the Precautionary and Liquidity Line (PLL) facility to buffer the island from external shocks.

Over time, the loan and credit facility will give the Government options to refinance over US$1 billion in external debt maturing over two years. Refinancing would give the Government savings of up to US$40 million.

“The savings will be between US$35 to US$40 million a year,” Clarke said, noting that the Government has the option to replace old debt at higher interest rates with new debt at lower rates of 3.8 per cent.

An IMF team led by Esteban Vesperoni held virtual and in-person meetings with the Jamaican authorities from December 5 to 15 to discuss the request for access under the PLL and the RSF.

The deal will seek IMF executive board approval in February 2023.

Vesperoni explained that the authorities have articulated an ambitious agenda to address the challenges posed by climate change that warrant support under the RSF. Reducing Jamaica’s susceptibility to natural disasters, rising sea level, and extreme weather events will help foster growth and job creation as well as incentivise private-sector financing for a range of investments, including those related to energy efficiency, emissions reduction, and increasing resilience.

“Over the past few years, Jamaica has been buffeted by a difficult global environment – from COVID-19, the Russian war in Ukraine, and the ongoing tightening of global financial conditions,” Vesperoni stated.

He added that good policy and macroeconomic stability have resulted in economic stability and that tourism arrivals are now hovering at pre-pandemic levels. Additionally, that international reserves are high despite inflation.

“The financial system is well-capitalised and liquid. The outlook points to a continued recovery in activity and inflation falling back within the Bank of Jamaica’s target range by end-2023,” he said.

“Nonetheless, global risks remain high. The war in Ukraine may push commodity prices higher, a stronger-than-envisaged tightening of global financial conditions may curb capital flows and reduce remittances, and new COVID variants could disrupt tourism and trade,” Vesperoni acknowledged.