February 25, 2010
IDB approves $170 million in loans for Jamaica
The Inter-American Development Bank has approved three loans for a total $170 million to help Jamaica advance social safety net reforms, boost business competitiveness, and support public sector reforms to improve effectiveness of expenditure and performance management. Advancing Social Safety Nets A $50 million credit, the first of a policy-based loan series, will help consolidate ongoing social safety net reforms and reduce vulnerability of the poor during a time of economic downturn. The Bank's funds will support the Government's Human Capital Protection Programme, which aims to protect basic health, education and safety net spending during the economic decline; and improve the effectiveness of reforms to key social safety net programmes. Specifically, the loan will finance protection of public spending on primary health care and nutrition; early childhood development; primary, secondary and special education; the PATH conditional cash transfer program and the School Feeding Programme. It will also support improvements to the pro-poor targeting of the School Feeding Program’s feeding subsidies for PATH children, the expansion of PATH coverage by increasing the total registered beneficiaries to 290,000, including 45,000 elderly beneficiaries, and the roll out of tools that will strengthen the synergies of early childhood development interventions including the Child Health Passport. Business Competitiveness The $60 million credit for the “Competitiveness Enhancement Programme II", the second of three consecutive policy-based loans for this area, will support government efforts to address key constraints to Jamaica's competitiveness by promoting reforms to reduce the cost of doing business. The program structure is divided into four reform areas: competitiveness implementation framework; tax reform, aimed at broadening the tax base and having a more efficient and transparent collection system; improving access to finance and financial market development; and reduction of business costs through expedited land titling. Additionally, it will continue with ongoing actions designed to reduce government support for state-owned enterprises and take further measures to promote electronic transactions, including full implementation of the legal, regulatory and institutional framework of mobile banking, paving the way for providing financial services to poor populations, particularly in remote areas. On land titling, the second phase of the program seeks to promote actions to lower the cost of land registration, increase the speed for land titling, and address regulatory bottlenecks. By reducing the cost and time of the land titling and registration process, small landowners will be able to use their land as collateral for business endeavours and make improvements in their property as a result of ownership. Also, land ownership reduces crime in neighbourhoods, which improves the overall business environment. Public Sector Management This $60 million credit for the “Public Financial and Performance Management Program II” is the second programmatic operation of three consecutive policy-based loans aimed at supporting Government of Jamaica’s efforts to improve expenditure and performance management in the public sector following a country-driven harmonized approach that demonstrates the government’s commitment to the reforms. In expenditure management, the program supports policy measures for the development and implementation of fiscal responsibility legislation to enhance accountability, transparency and sustainability in debt and medium term fiscal management. It also supports reforms in public financial management and public procurement, with an emphasis on standardization and enforcement of policies and procedures. In performance management the program aims at establishing a Performance Management and Evaluation System and enhancing the accountability framework for the improved functioning of the Executive Agency and Performance Based Institutions models. The Bank’s programmatic approach and the complementary technical cooperation provided under the PRODEV have been effective in promoting continuity in the reform process and the activities included in the program. All three loans approved by the Bank's board of directors are for a 20 year term, with a five-year grace period, and carry a variable interest rate based on LIBOR.
- Paul Constance