Jamaica will strengthen its structural program for economic growth with a $130 million loan from the Inter-American Development Bank (IDB) that was approved by the IDB’s Executive Board on August 5, 2015.
This is the second operation of a policy-based loan series, providing budget support for the government’s fiscal policy reform. The first operation was approved in February 2014.
The Jamaican government has been improving its public finances in recent years in order to set the stage for stronger economic growth. Under its economic reform program, Jamaica approved key tax reforms that aim at broadening the tax base while correcting a distortionary tax system.
Among other measures, the program targets strengthening of Jamaica’s pension system, and most specifically, efforts to ensure that the pension fund is financially sustainable. This includes reforming the National Insurance Scheme (NIS). In addition, a fiscal rule has been established. These reforms will contribute to maintaining and enhancing Jamaica’s sound fiscal program.
Jamaica’s Minister of Finance, the Honorable Peter Phillips, stated: “The IDB has been a consistent partner in this programme of economic reform on which we have embarked and we have made considerable progress because of the support received by the IDB. We don't always agree on everything, but when we don't, we can discuss and emerge with an even stronger bond of collaboration and are better off for having these discussions. This approval, on the eve of Jamaica's celebration of the 53rd anniversary of Independence, is appropriately timed as we strive to ensure the unfurling of all the opportunities that Independence represents. Our sincere thanks to the IDB for a partnership that is helping us to deliver on the legitimate expectations of the people in Jamaica for a better life.”
According to Alexandre Meira da Rosa, Vice President for Countries at the IDB, “This agreement had the full support of everyone on the IDB Board. This is a credit and tribute to the efforts of Jamaica to carry out the reforms necessary to achieve economic and social growth. We believe that Jamaica is about to turn the corner and harvest the results of its efforts. This agreement is the fulfillment of a commitment that IDB President Moreno and I made to Minister Phillips last year, to walk hand-in-hand with Jamaica on the reform journey. We celebrate the fulfillment of that promise and reaffirm the full commitment of the IDB to Jamaica.”
The IDB loan has a 20-year maturity, a 5.5-year grace period and an interest rate based on LIBOR which is currently about 1.2 percent.
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean.The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.