IDB loans will aid quality of public sector services and improve efficiency in public spending

Jamaica is taking steps to improve the quality and efficiency of transactional public services with a US$160 million loan programme, which was approved by the Inter-American Development Bank on November 15, 2017. The programme consists of a US$110 million policy-based loan and a US$50 million investment loan.

In support of the Jamaican Government’s Public Sector Transformation (PST) Programme, this loan package is expected to result in an improvement in service delivery in prioritized ministries, departments and agencies as evidenced by a reduction in waiting times and transaction costs as well as a  better adaptation of the public sector workforce to citizen needs. It is also expected that the efficiency measures supported by the programme will create space for growth enhancing capital spending in the country. The policy measures and the activities under the PST Programme, especially in the implementation of online services, support innovation and are critical to the development of Jamaica’s digital government-related activities.

In terms of its competitive performance, Jamaica is ranked at 70 out of 137 economies in the world in the World Economic Forum’s 2017-2018 Global Competitiveness Index; inefficient government bureaucracy ranked as the most problematic factor for doing business in Jamaica. The Jamaican Government’s relatively high wage bill accounts for one-third of public expenditures, creating budgetary rigidities, and limiting the fiscal space available for important policy priorities, including social spending, capital spending, or a reduction in tax rates.

Mrs. Therese Turner-Jones, the General Manager for the Inter-American Development Bank’s (IDB) Caribbean Country Department, noted that: “This loan programme is an important next step for Jamaica as the Government focuses on accelerating economic growth while strengthening fiscal policy. A more efficient public sector will reduce red tape, facilitate investment, economic growth, and job creation. The IDB is very happy to support the government in the transformation of the public sector, which will ultimately serve to improve lives by creating vibrant sustainable economies where people are safe, productive, and happy.”

This loan package builds on the IDB’s experience in numerous projects and related analytical work to improve public service delivery, public sector efficiency, human resources management in the public sector, and the improvement of the fiscal sustainability of pensions systems.

The policy-based loan is for a 20-year term, including a 5.5-year grace period, at a LIBOR-based interest rate; the investment loan is for a 24-year term, including a 6.5-year grace period at a LIBOR-based interest rate.