Ministry of Finance & the Public Service

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Minister of Finance and the Public Service, Hon. Audley Shaw

Minister of Finance and the Public Service, Audley Shaw, has said that Government's major policy shift away from expensive loans from the international commercial markets to increased reliance on multilateral lending agencies, is paying significant dividends for the country.

The Finance Minister, who was speaking in a national broadcast on Sunday night (Nov.23), said that loans amounting to some US$300 million have already been secured and a further commitment of US$110 million is due in two weeks, with substantial additional commitments going forward.

He further disclosed that by February of next year, significant additional flows are expected from the World Bank and the Caribbean Development Bank.

While emphasizing that the pace and timeliness of the shift has been influenced by the unfolding international financial crisis, Mr. Shaw explained that, "long before the current crisis, we indicated our intention to re-engage and significantly expand our relationship with the multilateral lending agencies, the World Bank, the Inter-American Development Bank, the Caribbean Development Bank and our bilateral partners like the European Union. This re-energizing of our relationship with these institutions has given us access to hundreds of millions of foreign exchange flows, which has proven to be vital in the face of the global financial crisis."

The Minister informed that some of this funding will replace the flows that the government had hoped to access from the private capital markets, which are now closed to most emerging market countries.

According to the Finance Minister, significantly increasing access to financing from the multi-laterals makes sense, since their lending rates are considerably lower and more stable than the commercial markets. The challenge, he said, since loans from these agencies are largely policy-based loans, "is to harmonize our domestic policies, especially those dealing with fiscal and administrative reform, with the lending policies of these agencies. This is not a difficult exercise because there is a convergence of policies given this government's commitment to good governance."

With respect to Jamaica's credit-worthiness, the Minister informed the nation that Jamaica remains on good terms with all International Financial Institutions, including the International Monetary Fund, which completed its semi-annual visit to Jamaica last Friday. "In this calendar year, we have had goodwill visits from the leadership of the World Bank, Caribbean Development Bank and the Inter-American Development Bank. In early December, the Managing Director of the International Monetary Fund, Mr. Dominique Strauss-Khan, will add to this support by visiting us as part of a three-country tour, which includes the Dominican Republic and Costa Rica," he informed.

In harmony with the renewed focus on multilateral institutions, the Minister explained that the government is embarking on a set of major reforms aimed at achieving higher economic growth, with fiscal sustainability and debt reduction at the cornerstone of the new reform agenda.

The four main pillars of the programme entails: promoting fiscal sustainability through greater control of public sector balances and debt; increasing the efficiency of government's financial management and budget processes; improvement in tax policy and administration geared toward a more simplified, equitable and efficient tax system to boost revenue flows; and improvement in public sector productivity, efficiency and responsiveness.

He also noted there is solid support for the Government's reform programme from the International Development Partners (IDPs), which have expressed their willingness to provide resources to replace some high cost commercial debts on better terms, as well as technical assistance to undertake the identified reforms and to strengthen capacity within the public sector.

Urging Jamaicans to use this time of challenge as an opportunity to develop and grow, the Minister emphasized that, "we are not going to curl up and wait for the worst to pass. We are going to fight our way through this global crisis. We are going to support our productive sector and enable them to seize opportunities even in the face of adversity."

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