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Jamaica returns to the IMF
The finance minister Audley Shaw has confirmed that Jamaica will be resuming a borrowing relationship with the International Monetary Fund (IMF).
He made the announcement in Parliament today, ending weeks of speculation and months after former Prime Minister Edward Saga’s said there was no choice.
Mr Shaw started his presentations with more sad news about the state of the economy. The fallout in the bauxite sector, falling earnings from tourism and the list of declines went on.
Then Mr Shaw announced that Jamaica had no choice than to return to the IMF.
According to Mr Shaw Jamaica will be seeking to borrow up to US$1.2 billion through a stand by arrangement with the IMF.
The US$1.2 billion represents 300 per cent of the quota that Jamaica can borrow from the IMF.
The Fund allows a country to borrow up to six times its quota.
According to Mr Shaw a technical analysis by Government officials has indicated that there is no option but to raise the money.
“Unless there is this influx of new capital, Jamaica’s ability to remain current on its international obligations will deteriorate sharply this year. Also without the assurance that these resources offer the improvement in investor confidence that is necessary to underpin a reduction in interest rates will not occur. Maintaining order in the foreign exchange market and reducing borrowing cost are both crucial elements in building a stable environment that is friendly to investment, to job creation and to growth.,” Shaw said.
But why the IMF?
Mr Shaw says the multilateral institution that is best placed to respond to crises like the one the world is undergoing. “We expect to complete the preparatory work and documentation by the middle of August and to make a formal submission to the executive board, that would be the letter of intent, of the IMF when it resumes
from its summer break in September.
The finance minister Audley Shaw has confirmed that Jamaica will be resuming a borrowing relationship with the International Monetary Fund (IMF).
He made the announcement in Parliament today, ending weeks of speculation and months after former Prime Minister Edward Saga’s said there was no choice.
Mr Shaw started his presentations with more sad news about the state of the economy. The fallout in the bauxite sector, falling earnings from tourism and the list of declines went on.
Then Mr Shaw announced that Jamaica had no choice than to return to the IMF.
According to Mr Shaw Jamaica will be seeking to borrow up to US$1.2 billion through a stand by arrangement with the IMF.
The US$1.2 billion represents 300 per cent of the quota that Jamaica can borrow from the IMF.
The Fund allows a country to borrow up to six times its quota.
According to Mr Shaw a technical analysis by Government officials has indicated that there is no option but to raise the money.
“Unless there is this influx of new capital, Jamaica’s ability to remain current on its international obligations will deteriorate sharply this year. Also without the assurance that these resources offer the improvement in investor confidence that is necessary to underpin a reduction in interest rates will not occur. Maintaining order in the foreign exchange market and reducing borrowing cost are both crucial elements in building a stable environment that is friendly to investment, to job creation and to growth.,” Shaw said.
But why the IMF?
Mr Shaw says the multilateral institution that is best placed to respond to crises like the one the world is undergoing. “We expect to complete the preparatory work and documentation by the middle of August and to make a formal submission to the executive board, that would be the letter of intent, of the IMF when it resumes
from its summer break in September.
