The Government of Jamaica (GOJ) hopes to have a new agreement with the International Monetary Fund (IMF) by November to replace the existing arrangement which comes to an end in March.

Speaking at a joint GOJ/IMF press conference yesterday, Prime Minister Andrew Holness announced that the Government has reached a staff-level agreement with the IMF which is tentatively scheduled for consideration by the IMF board in November.

The new economic programme will provide Jamaica with assistance from the IMF under a three-year precautionary Stand-By Agreement. The agreement is equivalent to support of US$1.7 billion and, upon approval by the board, will see Jamaica being awarded another US$430 million.

Holness noted that the IMF’s decision to support the arrangement signals a “firm vote of confidence in Jamaica”.

“Let me emphasise that Jamaica, by its policy, credibility, and discipline, has reaped a US$1.7-billion insurance dividend which gives confidence to any investor that Jamaica is serious about reform and will be able to withstand any extraneous shocks, whether by way of natural disaster, commodity price volatility, or otherwise,” Holness said.

“This new proposed programme, and the important commitment of the IMF resources that it entails, is a firm vote of confidence in Jamaica. Our request to move to a precautionary arrangement is a sign of strength and reflects the policy, credibility, and strong macroeconomic management of the Government,” he continued.

The IMF mission was led by Uma Ramakrishnan, who visited Kingston during September 21 to 30 to conduct the discussions on the programme.

Holness stated that, given the Bank of Jamaica’s comfortable foreign reserves position, the Jamaican authorities have indicated their intention to treat the stand-by arrangement as precautionary or as an insurance policy against unforeseen economic shocks that are beyond Jamaica’s control.

“We have seen questions in the public domain indicating uncertainty as to what the future will look like. Uncertainty about the future can dampen the investment climate and limit bold investment decisions. The Government has taken a strategic decision to bring policy certainty to the economy,” he told the audience at the Office of the Prime Minister.

According to the prime minster, under the new arrangement, the Government wishes to reorient public resource allocation toward infrastructure, social protection, and security-related spending, while transforming the public sector to be more efficient and delivery-focused.

Additionally, the Government hopes to modernise the monetary policy framework and build the foundation for an eventual move to inflation targeting, bolster the resilience of the financial system, and to work with the Economic Growth Council to implement initiatives that unlock Jamaica’s growth potential and promote private sector jobs.

Director of IMF’s Western Hemisphere Department Alejandro Werner said Jamaica has made commendable progress in its economic adjustment programme over the past three-and-a-half years under the existing IMF-supported programme.

He added that Jamaica’s fiscal discipline and proactive debt management have helped in reducing public debt more than 25 per cent of Gross Domestic Product since the start of arrangement under the Extended Fund Facility.

“Macroeconomic stability is becoming entrenched, as evidenced by low inflation, the build-up of foreign currency reserves and a decline in the current account deficit. Important reforms are being undertaken to unlock Jamaica’s growth potential,” Werner said.

“Nevertheless, a renewed focus on growth and job creation is needed, and the new programme is aimed at sustaining macroeconomic stability, boosting employment, raising the living standards of the Jamaican people, and progressively reducing a poverty level that remains too high,” he continued.