The Executive Board of the International Monetary Fund (IMF) has approved a disbursement in the amount of US$520 million for Jamaica under the Rapid Financing Instrument (RFI).
These resources will help meet the urgent balance of payment needs stemming from the COVID-19 pandemic, while catalyzing additional support from development partners.
The COVID-19 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.
Jamaica’s established track record of economic reforms has created buffers that are invaluable today in responding to the COVID-19 crisis. Yet, despite the authorities’ proactive mitigation strategies, the pandemic is significantly impacting Jamaica’s economy.
The Government of Jamaica has declared the entire island as a disaster area and established a special taskforce to coordinate the country’s COVID-19 response and recovery efforts, with the paramount objectives of minimizing the loss of human life and protecting livelihoods.
Following the Executive Board discussion, Tao Zhang, Deputy Managing Director and Chair, made the following statement:
“The Jamaican authorities have proactively responded to the COVID-19 pandemic. Nevertheless, 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 disbursement under the RFI will strengthen reserves and help catalyze additional support from other international financial institutions and development partners.
“The authorities’ policy response to the COVID-19 crisis is appropriate, including the timely adoption of targeted measures to support jobs and provide resources to vulnerable segments of the population. The COVID-19 emergency warrants a temporary reduction of the primary surplus and a modest delay in achieving the Fiscal Responsibility Law’s goal of bringing debt 2 down to 60 percent of GDP. Notwithstanding the delay, the authorities’ renewed commitment to debt sustainability, including their plan to accelerate debt reduction efforts should growth overperform 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 FX intervention limited to stem excessive volatility.
“Once the crisis abates, building on their demonstrated commitment to reform and stabilityoriented measures, the authorities should continue the implementation of their ambitious reform agenda to support the economic recovery and ensure strong and sustainable economic growth.”
