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IMF return no easy ride; Shaw says hard work and sacrifice ahead for Jamaicans

Published:Saturday | February 6, 2010 | 12:00 AM

FINANCE MINISTER Audley Shaw says the country's return to the International Monetary Fund (IMF) will mean "hard work and sacrifice" by Jamaicans.

The multi-lateral lending agency on Thursday approved a 27-month stand-by arrangement, paving the way for the country to borrow up to US$1.27 billion to support its medium-term economic programme and cope with the consequences of the global downturn.

"The agreement marks the commencement of a challenging, but decisive journey towards good governance, solid economic development and the restoration of hope for all Jamaicans," Shaw said in a statement on Thursday.

Jamaica rushed to the IMF for balance-of-payment support after turbulent world economic conditions crippled several sectors, bringing economic activities to a crawl.

The approval of the stand-by arrangement is expected to generate about US$1.1 billion in funding from other international financial institutions.

A disbursement of US$640 million is now available to Jamaica. The IMF on Thursday said that part of this first disbursement would be used to establish a financial stability support fund aimed at supporting the country's financial sector.

coerced into trading

Financial institutions were coerced into trading in high-yielding government bonds for longer-term and lower-interest papers under a debt-exchange programme as Government moved to tighten the fiscal accounts.

Government had also announced a $22 billion tax package in December to rake in revenue, bringing to $46 billion in new taxes announced this fiscal year.

The finance minister said the moves were necessary in order to set the stage for financial boom.

"All members and sectors will share in the tremendous sacrifice before us as together we lay down an economic framework conducive to investment, job creation, increased productivity and the generation of significant foreign- exchange earnings," Shaw said.