Jamaica will receive a $932 million loan from the International Monetary Fund after the Caribbean island restructured about $9 billion in local debt for the second time in three years.
Jamaica has started to “tighten fiscal policy and prepared a comprehensive four-year economic reform program” to lower debt, the IMF said today in an e-mailed statement. The agreement calls for an initial disbursement of $207 million.
“The main objective of the program is to put public debt on a firmly downward trajectory and thereby create a virtuous cycle of debt sustainability and higher economic growth,” the Washington-based lender said. “For most of the past three decades, Jamaica has suffered from very low growth, high public debt, and serious social challenges.”
Jamaica’s economy contracted 0.9 percent in the fourth quarter of last year as the country struggled due to the effects of Hurricane Sandy. Central bank reserves fell below $1 billion in February for the first time since 2001.
In a speech to lawmakers today, Finance Minister Peter Phillips said Jamaica may seek additional financing from the World Bank and Inter-American Development Bank, which has vowed $1 billion in loans.
“We want to establish for ourselves a track record of performance as the context for requesting further support as needed,” Phillips said.