The aim of the bailout
Published:Wednesday | August 14, 2013 | 12:00 AM
According to the Jamaica Extended Fund Facility (EFF)-IMF Country Report 13/126, the main pillars of the four-year support programme for Jamaica are:
Structural reforms to boost growth;
Actions to improve price and non-price competitiveness;
Upfront fiscal adjustment, supported by extensive fiscal reforms;
Debt management operations that place public debt on a sustainable path, while protecting financial system stability; and
Improved social protection programmes to help the most vulnerable.
The Jamaican authorities and the IMF mission agreed on the need for frontloading of the programme's policy actions, and a focus on institutional change, in order to underpin the credibility of the strategy against the history of reform failure.
First, to underpin the programmed immediate fiscal effort by about 2.5 per cent of gross domestic product, the EFF programme includes a prior action on multiyear wage agreement and an upfront new tax package.
Second, critical structural reforms to sustain the fiscal effort are concentrated in the first year of the programme.
Third, given that fiscal adjustment alone would not be sufficient for restoring debt sustainability the authorities have implemented a debt exchange to secure a further reduction in the debt burden.
The EFF programme period spans FY 2013/14 to FY 2016/17.