IMF Executive Board Approves US$968 Million Under The Precautionary And Liquidity Line Arrangement And US$764 Million Under The Resilience And Sustainability Facility For Jamaica  

 

  • The Executive Board of the International Monetary Fund (IMF) approved a 24-month arrangement under the Precautionary and Liquidity Line (PLL) with access of US$968 million (190 per cent of quota), to provide insurance against risks from higher commodity prices, a global slowdown, tighter-than-envisaged global financial conditions, and new COVID outbreaks.
  • The Executive Board also approved an arrangement under the Resilience and Sustainability Facility (RSF) for US$764 million (150 per cent of quota) to strengthen physical and fiscal resilience to climate change, advance decarbonization of the economy, and manage transition risks. The RSF is expected to catalyze funding for climate priorities from other official lenders and the private sector.
  • The PLL will support the authorities’ plans to improve financial supervision, the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, and data reporting.
  • Reforms in the RSF, built on Jamaica’s home-grown climate policy, were prepared in close collaboration with the World Bank and other international partners. They create incentives to switch to renewables, reduce energy consumption, develop green financial instruments, and require proper management of climate risks in the financial sector. Reforms are expected to catalyze private and official financing for climate-related investment.
  • The Finance Minister said although Jamaica has US$4 billion in gross reserves, the PLL provides an additional balance of payment buffer in the event of additional economic shocks. Funds under the RSF are being made available at an interest rate of 3.8 per cent with 20 years to repay, and no principal repayment for the first 10 years.
  • Clarke said this facility should allow Jamaica to attract significant private sector investment so it can implement policies conducive to climate financing. It should also help to reduce Jamaica's refinancing risks and to create fiscal space, compared with the alternative of international capital market refinancing in a rising interest rate environment.

(Sources: IMF and RJR)