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Jamaica’s economic performance boost budget support

Published:Wednesday | June 10, 2015 | 12:00 AMMcPherse Thompson

The quality of Jamaica's economic performance under its programme with the International Monetary Fund (IMF) has resulted in the Government obtaining US$165 million (J$18.4 billion) in budget support last year from multilateral financial institutions, according to the Planning Institute of Jamaica (PIOJ).

Official development assistance, which includes concessionary loans, grants and technical assistance to developing countries for the promotion of their economic development and welfare, totalled US$2.6 billion ($289.2 billion) from international development partners.

Focal areas which received assistance during the period included macroeconomic and social stability, growth, citizen security and justice, education and training, and climate change resilience, the PIOJ said in its 2014 Economic and Social Survey Jamaica.

Newly approved official development assistance to Jamaica totalled US$515.8 million ($57.4 billion), a decline of 14.4 per cent relative to 2013.

Multilateral financial institutions were the major sources of new loan and grant financing totalling US$394 million ($43.8 billion) and US$78.3 million ($8.7 billion), respectively.

The level of new loan resources from multilateral financial institutions increased by 140.2 per cent to US$394 million ($43.8 billion) compared with US$164 million ($18.2 billion) in 2013.

"Of the total new loan resources from MFIs (multilateral financial institutions), US$165 million ($18.4 billion) was committed in the form of budget support, reflecting Jamaica's good performance under the agreement with the IMF. This success allowed Jamaica access to additional budget support from the MFIs," said the survey report.

The PIOJ noted that macroeconomic stability is a condition for budget support.

New grant resources from international development partners amounted to US$111.8 million ($12.4 billion) of total new official development assistance, an overall decrease of 12.5 per cent compared with the previous year.

The decline was mainly as a result of the 75.5 per cent reduction in grant resources from bilateral partners, which totalled US$14 million ($1.6 billion), the PIOJ said.

The allocation of new official development assistance continued to reflect an emphasis on the administrative sector, which accounted for US$258.3 million ($28.7 billion) of total new development assistance.

Those funds were mainly aimed at budget support programmes. The allocation to the social infrastructure sector was US$182.2 million ($20.3 billion). Allocations to the directly productive, economic infrastructure and environment and climate change sectors were US$50.3 million ($5.6 billion), US$2.6 million ($289.2 million) and US$22.3 million ($2.5 billion), respectively.

Net flows with Jamaica's three main multilateral lending partners, namely the Inter-American Development Bank, Caribbean Development Bank and World Bank, as well as the People's Republic of China totalled US$108 million ($12 billion), compared with US$143.8 million ($16 billion) in 2013.

Total repayment of principal, interest and other charges decreased by 15 per cent to US$188.7 million ($21 billion), while disbursements to on-going projects and programmes totalled US$298.6 million ($33.2 billion), a decrease of 18.4 per cent compared with 2013.

The PIOJ said three new country strategies were signed with the Caribbean Development Bank (CDB), European Union (EU) and the World Bank. The funding commitments under those strategies were as follows: CDB, US$33.8 million ($3.8 billion); EU, €46 million ($6.7 billion), and World Bank, US$510 million ($56.7 billion).

Those country strategies provide a clear focus on the priorities agreed upon between the Government and the multilateral financial institutions moving forward, it said.

Last year, chief executive officer of the Petrocaribe Fund, Dr Wesley Hughes, noted that in two years Venezuela provided US$1 billion in financing to Jamaica and that it was then a better source of budgetary support to Jamaica. In 2012, he said, total official development assistance to Jamaica was only US$172 million.

The European Union remains the major contributor of aid to developing countries, including the Caribbean, according to figures released in Brussels in April.

In mid-2011, the European Union withheld budget support from Jamaica because of the slow pace of implementation of key structural reforms such as tax, public sector and pension. It emphasised then that positive and fruitful discussions with the IMF were critical to unlock the disbursements.

That was lifted following Jamaica's agreement on a four-year Extended Fund Facility with the IMF in May 2013.