The International Monetary Fund (IMF) has approved a US$520 million disbursement to Jamaica under the Rapid Financing Instrument (RFI) to aid with covid19 relief.
The is 100 per cent of the allotted amount that Jamaica can access. In a statement Friday, the IMF said these funds will help meet “the urgent balance of payment needs stemming from the covid19 pandemic, while catalysing additional support from development partners.”
The covid19 shock hit Jamaica only a few months after the successful completion of its precautionary stand-by arrangement with the IMF, which was underpinned by strong ownership and civil society oversight, the fund noted. “Jamaica’s established track record of economic reforms has created buffers that are invaluable today in responding to the covid19 crisis. Yet, despite the authorities’ proactive mitigation strategies, the pandemic is significantly impacting Jamaica’s economy.”
Jamaica is the hardest hit English-speaking Caribbean country with 520 confirmed cases as of May 17.
The Jamaican government has declared the entire island as a disaster area and established a special taskforce to coordinate the country’s covid19 response and recovery efforts, with the paramount objectives of minimising the loss of human life and protecting livelihoods, the fund said. Tao Zhang, IMF deputy managing director said the Jamaican authorities have proactively responded to the pandemic.
Nevertheless, he continued, despite the authorities’ best efforts, the pandemic is severely impacting the Jamaican economy, as a sudden stop in tourism and falling remittances are generating a sizable balance-of-payments need. Moreover, the economic outlook remains subject to an unusually high degree of uncertainty. “The authorities’ policy response to the covid19 crisis is appropriate, including the timely adoption of targeted measures to support jobs and provide resources to vulnerable segments of the population,” he said.
The emergency warrants a temporary reduction of the primary surplus and a modest delay in achieving the Fiscal Responsibility Law’s goal of bringing debt down to 60 per cent of GDP, the fund said, but notwithstanding the delay, the authorities’ renewed commitment to debt sustainability, including their plan to accelerate debt reduction efforts should growth over perform over the medium term, is welcome. “The Bank of Jamaica’s accommodative monetary policy stance and ongoing efforts to support systemic liquidity and ensure financial stability remain appropriate. Exchange rate flexibility should continue to act as a shock absorber, with forex intervention limited to stem excessive volatility, the IMF said. Once the crisis abates, building on their demonstrated commitment to reform and stability-oriented measures, the authorities should continue the implementation of their ambitious reform agenda to support the economic recovery and ensure strong and sustainable economic growth, the fund concluded. Other Caricom territories to apply for and have been given access to these are Dominica (US$14 million); Grenada (US$22.4 million); Haiti (US$111.6 million) and St Lucia (US$29.2 million).
Haiti, as one of the world’s 25 poorest countries, has also received US$5.6 million in debt servicing relief from the IMF’s Catastrophe Containment and Relief Trust.
TT has not yet accessed any of this available fundin