More funds for economic reform programme

THE EUROPEAN Commission has released the third tranche of 10 million euros (J$400 million) towards the island's Support for Economic Reform Programme (SERP).

Last month, Head of Delegation of the European Commission, Gerd Jarchow, handed over a letter from Poul Nielson, Member of the European Commission in charge of Development, to Omar Davies, Minister of Finance and Planning announcing that the third tranche would be released.

Jamaica sought support from the European Union for its Economic Reform Programme in 1999. Following the adoption by Government of a medium term strategy, which set out the principles and objectives of the macro-economic policy and specific measures to be taken over the three-year-period April 1999 to March 2002, the EU approved a structural adjustment programme and signed a financing agreement in April 2000.

According to a release from the EU, under the agreement, the SERP provides a grant for budget support amounting to 31 million euro ($1.3 billion) in three tranches over the fiscal year 2000-01 and an additional three million euro grant ($126 million) is made available for human resources development and capacity building.

The programme aims to assist the Government to maintain levels of social and capital spending and to support deficit reduction measures, which will consequently reduce the interest expenditure in the budget. Technical assistance and training will significantly enhance the capacity of the institutions responsible for economic and debt management.

In his letter, Mr. Nielson expresses the European Commission's appreciation of the important positive economic results the Government of Jamaica has achieved during the last fiscal year by pursuing economic reforms aimed at achieving economic growth that is making an important contribution to a desired poverty reduction in the country.

The release said the European Commission is continuing to follow with much interest the economic performance and implementation of the programme as it was concluded in the absence of a formal IMF-monitored programme.

"Consequently, the European Commission appreciated the generally positive opinion the IMF has expressed in its 201 Article IV Consultations statement on the implementation of the staff-monitored programme," the EU said.

Based on the positive economic developments, the European Commission has recently decided on the SERP II programme providing a grant for budget support amounting to 21.7 million euro (868 million JMD). "The European Union will therefore continue its efforts to provide macro-economic budgetary support to Jamaica that will assist the Government to carry out required reforms," it said. In this context, the EU added, a faster economic growth with low inflation and the reduction of public sector debt appear to remain the main challenges also for the next fiscal year.

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