WASHINGTON, February 23, 2010 - The World Bank Board of Directors approved today a US$200 million loan for Jamaica to support the government's comprehensive reform program to address fiscal and debt sustainability. The initiative is a coordinated effort by multilateral development banks and the International Monetary Fund to help the Government of Jamaica sustain its long-term development agenda.
The First Programmatic Fiscal Sustainability Development Policy Loan will support a series of measures to enhance fiscal and debt sustainability, increase the efficiency of public financial management and budgeting processes, and increase tax revenues through improved tax administration.
“The Government of Jamaica deeply appreciates the World Bank’s support for the country’s reform program,” said Audley Shaw, Jamaica’s Minister of Finance. “Together, with support from the other international development partners, we are implementing a comprehensive reform program to put the country back on a sustainable path and achieve significant growth over the medium-term.”
“Despite the severe impact of the global crisis, Jamaica remains committed to the longer-term reform agenda and has taken critical measures to advance key public sector reforms,” said Yvonne M. Tisikata, World Bank Director for the Caribbean. “The Fiscal Responsibility Framework, the comprehensive debt exchange, the public bodies’ rationalization plan, and the tax administration reforms are far-reaching and, if fully implemented, will generate large benefits for the Jamaican people,” she added.
Specifically, the loan will support the government’s program through the following areas:
- Enhancing fiscal and debt sustainability. This component aims to increase fiscal consolidation in public sector, improve predictability, transparency and accountability in fiscal management, increase control on public spending and debt generation, reduce debt service burden, and improve debt management. In addition, it seeks to reduce financial vulnerabilities due to the adverse consequences of the ongoing global economic downturn.
- Increasing the efficiency of public financial management and budgeting processes. Under this component, reforms include improving the efficiency and prioritization of public investment, strengthening financial management in the public sector, and increasing the effectiveness of government budgeting practices.
- Strengthening tax administration and increasing tax revenue capacity. Policy actions under this component include reforms to enhance audit and control, improve client services for tax payers, broaden the tax base, simplify tax payments, and introduce greater uniformity in tax policy.
The policies supported by the World Bank are complemented by the IMF Standby Arrangement approved on February 4, 2010, in the amount of US$1.27 billion, as well as by budgetary support from the Caribbean Development Bank, the European Union and the Inter-American Development Bank.
The US$200 million commitment-linked loan with a variable spread is payable in 30 years, including a 5.5-year grace period.