KINGSTON, Jamaica: The government of Jamaica and the Inter-American Development Bank (IDB) have signed a contract for three policy-based loans totaling J$15.2 billion (US$170 million).
Minister of Finance and Public Service Audley Shaw said the money represented the first tranche of a US$600 million loan to be handed over in three stages by the end of the year. He said the loans will mature in 20 years and are payable in semi-annual consecutive equal installments with a grace period of five years and six months from the date of signing. They are repayable at an interest rate of 1.32 per cent.
“The loans are to provide financial support for institutional and policy changes relevant to the government’s reform programs,” said Shaw.
The first loan of US$50 million will go towards the Human Capital and Protection Program, which will “help preserve recent gains in poverty reduction and reduce vulnerability of the poor during a time of economic downturn”.
The program specifically aims to protect basic health, education and safety net spending during the economic downturn and to improve the effectiveness of reforms to important social safety net programs.
The second loan of US$60 million will go towards the Competitiveness Enhancement Program II, which addresses key constraints to the competitiveness of Jamaica, by promoting the implementation of reforms to reduce the cost of doing business, in addition to the requirements for a macro-economic framework congruent with the program’s objectives.
The program’s structure, according to the finance minister, is divided into four major reform areas: the competitiveness implementation framework, tax and expenditure reform, improving access to finance and financial market development and reduction of business costs through expedited land titling.
“This would include the whole tax reform program that is taking place. The IDB, among other things, has also financed a tax expenditure study, the results of which are shortly to be presented to me and which will help to guide the whole process of reforming the incentive regime and the program of tax waivers,” Shaw said.
Shaw added that the program also includes the Credit Bureau legislation, which was recently passed in Parliament and will soon go before the Senate for approval, so that a Credit Bureau can be established in the country.
The third loan is for US$60 million, which will go towards the Public Financial and Performance Management Program II. The objective of this program is to continue supporting the government in carrying out its reform efforts to improve expenditure management and performance management in the public sector.
Shaw said the reforms combine policy initiatives and government actions in four areas: fiscal responsibility, financial management, public procurement and performance management and accountability.
“These reforms are critical for the coherent operation of the fiscal responsibility framework and for increasing the efficiency of public expenditure, which contribute to ease the fiscal burden,” he said.