Jamaica eyes stronger ties as CAF rethinks risk metrics

Finance Minister Fayval Williams says Jamaica is looking to deepen its relationship with CAF-Development Bank of Latin America and the Caribbean, noting that the financial institution has grown more sensitive to the country’s needs.

Williams, who was speaking to journalists in Panama City at the CAF International Economic Forum last week, said the bank is now more practical in its assessment of countries like Jamaica and the challenges they face, especially with natural disasters.

“If you look at the history of how countries like ours are assessed, they look at per capita GDP and other variables but now, with the passage of not just [Hurricane] Melissa but other hurricanes that we’ve had, we’re seeing where [this] is becoming a variable in the equation. The frequency with which we have these events, the impact on our economies of those events. That has come front and centre to international partners,” said Williams.

Jamaica has been a Series C shareholder of CAF and is evaluated based on its ability to contribute to and benefit from a more integrated Latin American and Caribbean (LAC) economy.

CAF’s assessment often focuses on solvency, looking at debt-to-GDP trends and adherence to fiscal rules. It also looks at sustainability and whether the country has alignment with Green Bank goals and climate resilience.

Productivity is also questioned along with the potential for infrastructure to drive growth of small and medium-sized enterprises, as well as integration, by reducing trade barriers with the rest of the LAC region.

Foreign Affairs Minister Senator Kamina Johnson Smith noted that the bank has been “more sensitive” to the vulnerabilities of Jamaica, pointing to the proposed United Nations multidimensional vulnerability indices (MVI).

ASSESSMENT TOOL

MVI is the tool used by CAF and other lenders to assess Jamaica’s external risk.

Johnson Smith said that, though endorsed by the United Nations secretary general and approved by the Economic and Social Advisory Council, adoption continues to be slow.

She said that, despite this, CAF has been sensitive to how Jamaica does business and what the country’s needs are.

“Sometimes for us, as a pragmatic nation that’s always looking to get things done, it is the result that’s more important. So, the appreciation of our needs and adjustment of programming and projects to address them, that’s what’s important to us in this context,” said Johnson Smith.

Williams echoed Johnson Smith’s comments, pointing to the US$300-million debt deal which she said was a Jamaican dollar-denominated, US-linked instrument.

CAF issued a landmark J$46.6 billion bond (equivalent to approximately US$300 million) in the international market, marking the first time a bond denominated in Jamaican dollars was issued to international investors to reduce USD-denominated debt.

“So, they understood what we were telling them in terms of our exposure to movements in the US dollar. They did the first ever Jamaican-US dollar linked instrument and that is testimony to their sensitivity to our situation.

“We’ve described to them our vulnerabilities and they brought forward an instrument that worked for us,” she said.

Further, Williams highlighted the US$6.7-billion financing package secured through CAF and other global financial institutions for recovery from the devastation caused by Melissa.

CAF, along with the Caribbean Development Bank, Inter-American Development Bank Group, International Monetary Fund, and World Bank Group, coordinated to mobilise the funds.

The package combines emergency financing, new sovereign support, grants, and private-sector mobilisation to help Jamaica rebuild stronger and enhance long-term resilience.

“We’re still in the process of working through the different programmes now. Jamaica going forward will become a more active member of CAF. We have been a member for well over two decades but during that time we had not used or deepened the relationship as we should have. Now, going forward, it will be a much deeper relationship that we will have with them as we work through the programmes that are appropriate for us,” the finance minister said.

kimone.francis@gleanerjm.com