Jamaica Overview

LENDING

Jamaica: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

Context

For the last two decades Jamaica’s economy has been characterized by slow growth and high debt. Jamaica’s debt was estimated at 146.2 percent of GDP in March 2013, making the country one of the most indebted middle income nations in the world.

Government efforts to stabilize the economy yielded positive results in 2009-2011, but were set-back by fiscal and environmental challenges. Since then the Government has recognized the need to embark on a reform program to stabilize the economy and revitalize growth.

The International Monetary Fund (IMF) approved in May 2013 a four-year Extended Fund Facility (EFF) yielding a total support package of US$932 million to facilitate the Government of Jamaica’s (GoJ) economic reform agenda to stabilize the economy, reduce debt and create the conditions for growth and resilience. In coordination with the IMF, the World Bank and the Inter-American Development Bank (IDB) have each allocated US$510 million over the same period to support these efforts.

The International Finance Corporation (IFC), through investment and advisory services, will also provide critical support to the growth agenda.  The Jamaican economy is expected to grow at 1-2 percent over the medium term and has already showed signs of recovery.

Social Development

The country is also confronted by serious social issues that predominantly affect youth, such as high levels of crime and violence and high unemployment. Despite the progress registered in the last two decades, poverty and inequality have increased in Jamaica between 2007 and 2010.

From the early 1990s until 2007 Jamaica achieved significant advances in reducing poverty and lowering inequality. Nonetheless, its limited ability to deliver high growth and build a diversified economy has resulted in little fiscal capability to shelter the poor and vulnerable. 

In 2010 poverty rates soared to 17.6 percent from just under 10 percent in 2007. This has been attributed to the global crisis, together with increasing food and energy prices. Most of the poor are concentrated in rural areas, where poverty increased from 17 percent in 2008 to 23.2 percent in 2010.

The unemployment rate stands at about 15.2 percent at the end of 2013 with youth unemployment at about 30 percent. However, among Jamaica’s assets are its skilled labor force and strong social and governance indicators. In order to restore self-sustaining and job-creating growth, Jamaica will have to improve its international competitiveness and productivity, while also tackling urgent short-term economic and social needs.

For more data on Jamaica, visit World Bank's Open Data site.

 

Strategy

The World Bank has worked closely with Jamaica since the country gained its independence in 1962. Since then, the Bank has been actively engaged in extending credit and development assistance to the country through several projects in various sectors, including agriculture, rural and urban development, education, infrastructural development, tax administration reform, private sector development, small scale enterprise development and telecommunications. Most recently, the World Bank has supported a series of innovative solutions aimed at exploring the capacity of the youth in Jamaica also through the establishment of new industries in the ICT and creative sectors.

In line with Jamaica’s 2030 National Planning, a new World Bank Group Country Partnership Strategy (CPS) for 2014-2017 is under preparation and focuses on three strategic thematic areas:

  • Public sector modernization;
  • Enabling environment for private sector growth; and
  • Social and climate resilience.

The World Bank currently has six ongoing projects in Jamaica:

  •  The Social Protection Project (US$80 million) seeks to strengthen the country’s social insurance and social assistance system and is a follow-up to an earlier loan that supported the establishment of a conditional cash transfer program.
  • The Rural Economic Development Initiative (REDI) (US$15 million) aims to stimulate rural economic growth through 53 subprojects (currently financed) that support revenue generating activities in agriculture and tourism, as well as the provision of critical infrastructure, marketing and management subprojects in these sectors.
  • The Early Childhood Development Project (US$27 million) co-finances the implementation of Jamaica’s National Strategic Plan for Early Childhood Development by improving services for young children and their parents.
  • The Education Transformation Capacity Building Project (US$16 million) supports the implementation of the national Education System Transformation Program (ESTP).
  • The Energy Security and Efficiency Project (US$15 million) supports the implementation of the government’s energy policy, particularly the goals of enhancing Jamaica’s energy security and efficiency by reducing energy costs and reducing the country’s high dependence on imported petroleum products.
  • The Economic Stabilization and Foundations for Growth Development Policy Loan (US$130 million) supports the implementation of a set of policy and institutional reforms to increase competitiveness and improve fiscal management.

The Bank also provides grant funding to Jamaica. Currently, there are 4 grants under implementation totaling US$5.9 million.

 

Results

The Fiscal and Debt Sustainability Development Policy Loan (US$100 million) assisted the government in improving fiscal and debt sustainability during an on-going and severe global financial crisis by supporting policies for macroeconomic stability and helping to improve the efficiency and effectiveness of public spending and investment decisions.

Specifically, the project supported policy actions in the following areas: (i) promoting fiscal sustainability through controlling overall public sector balances, debt generation, and rationalization of public bodies, (ii) increasing the efficiency of public financial management and budgeting processes, and (iii) reducing distortions and enhancing the efficiency and fairness of the tax system.

The Social Protection Project (US$40 million) has been successful in expanding coverage of the national conditional cash transfer program  Advancement Through Health and Education (PATH) to ensure that about 14% of the population (which roughly corresponds to the poverty headcount) have access to cash transfers particularly during the food, fuel and financial crisis.

The benefit level was automatically adjusted in response to inflation and then further increased to provide additional incentives to secondary school students and boys in particular, to stay in school and finalize high school. Impact evaluation showed that PATH has substantially increased school attendance and the use of preventive health care services by children in poor families.

In addition, the project is helping working adults in PATH families to seek and retain employment through referral to the relevant support services, as well as improving public sector pension system administration.

LENDING

Jamaica: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments